Question: 1. 5.6 Suppose that the market demand function for cows is Q = 1,000,000p-2, where Q is the number of cows per month and p

1. 5.6 Suppose that the market demand function for cows is Q = 1,000,000p-2, where Q is the number of cows per month and p is the price per cow. The mar ket supply function is Q = p.

Exercises 349

a. What are the equilibrium price and quantity of cows? What is the consumer surplus, the pro ducer surplus, and welfare?

b. Now suppose that the government provides a subsidy of $100 per cow. What are the new equi librium price and quantity, the consumer surplus, the producer surplus, and welfare? Round your answers to whole numbers.

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