Question: Consider demand for corn to be presented by the demand function Q = 10 P. Supply function is Q = 2 + 0.5 P. Calculate

  1. Consider demand for corn to be presented by the demand function Q = 10 P. Supply function is Q = 2 + 0.5 P.
  1. Calculate the equilibrium price under the assumption of perfectly competitive market.
  2. The Government introduces a new set aside program to prevent further erosion of topsoil. It mandates all farmers to have at least 20% of their land se aside. Show on the graph this change and the new equilibrium price.
  3. Assume now the demand function remain Q = 10 P, but supply function is Q = 2 + 2 P. Answer same questions as in a) and b) and explain how and why your answers changed.

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