Question: The market demand function for corn is Qd = 15 - 2P and the market supply function is Qs = 5P -2.5, both measured in

The market demand function for corn is Qd = 15 - 2P and the market supply function is Qs = 5P -2.5, both measured in billions of bushels per year. The initial equilibrium price is $2.50, and the initial equilibrium quantity is 10 billion bushels. Consumer surplus is $25, producer surplus is $10, and aggregate surplus is $35. Suppose the government gives corn farmers a subsidy of $0.70 per bushel of corn. What will be the effects on aggregate surplus, consumer surplus, and producer surplus? What will be the deadweight loss created by the subsidy?

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