Consider a pumpkin market where the supply depends on the weather for the year. In bad-weather years, supply is P = 6Q ^s + 2 

In good-weather years, supply is 

P = 6Q ^s – 58 

The demand for pumpkins is 

Q ^d = 25 – ½P. 

Suppose that the government institutes a price support program to stabilize pumpkin prices at $32.

The government promises farmers to buy or sell all that consumers desire or producers want to sell, at the price of $32. Assume the government has enough storage capacity to buy all that farmers grow and enough in storage to supply all that consumers demand. Assume storage costs $1 per pumpkin. 

a) How many pumpkins do consumers consume in good-weather years?

b) How many pumpkins do consumers consume in bad-weather years?

c) How much does the government spend in good-weather years?

d) How much does the government earn in bad-weather years?

Answer rating: 100% (QA)

a Q 9 quantity demanded at the intersection of P 32 and Q 25 12 P is characterized by Q 25 1 2 32 25 ... View the full answer