The market demand function for wheat is Qd = 20 - 2P. The market supply function is QS = 4P - 4, both quantities measured in billions of bushels per year.
a. What are the aggregate surplus, consumer surplus, and producer surplus at the competitive market equilibrium?
b. If, instead, only 6 billion bushels are bought and sold in a year, with the consumers who have the highest willingness to pay buying them and the firms that have the lowest avoidable cost selling them, what are the aggregate surplus, consumer surplus, and producer surplus? How large is the deadweight loss?
c. If, instead, 16 billion bushels are bought and sold in a year, with the consumers who have the highest willingness to pay buying them and the firms that have the lowest avoidable cost selling them, what are the aggregate surplus, consumer surplus, and producer surplus? How large is the deadweight loss?