Calculate the original market equilibrium price and quantity

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Suppose the demand function for corn is Qd =10 -2 p , and supplyfunction isQs = 3p -5 . The government is concerned that the market equilibrium price of corn is too low and would like to implement a price support policy to protect the farmers. By implementing the price support policy, the government sets a support price and purchases the extra supply at the support price. In this case, the government sets the support price ps = 4.

(a) Calculate the original market equilibrium price and quantity in absence of the price support policy.

(b) At the support price ps = 4 , find the quantity supplied

Reference no: EM131068421

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