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**Unformatted text preview: **Name: _H, Assignment #6(’
Due in class on March 7, 1999 1. Assume that you are producing a commodity that is involved in a farm program. The target
price is $90 and the loan rate is 560. Using the graph below, answer the following questions
(making sure to show your work): . in, { ﬁx: U
(a) What is the level of supply given the above scenario? m 'I I'
' P“ 23
(b) What is the total amount of deﬁciency payment? (bio “W 60b Q (c) Assuming away storage and interest costs and assuming all production is included in the
program, what is the total loan value under the nonrecourse loan program, i.e., what is the
total value of defaulted loans? ‘
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i. 64% 'iv’ {‘i ['41. w Name: 2. Assume that you are producing a commodity that is involved in a farm program. The target
price is $100 and the loan rate is 370. Using the graph below, answer the following
questions (making sure to show your work): (a) -What is the level of supply given the above scenario?
2.6 (b) What is the total amount of deﬁciency payment? (100-70) -= 5760 Q (c) Assuming away storage and interest costs andasmming all production is included in the
program, what is the total loan value under the nonrecourse loan program, i.e., what is the
total value of defaulted loans? - Mi
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Ag: 31 _2_ kg- Name: 3. Assume that you are producing a commodity that is involved in a farm program. The target
price is $80 and the loan rate is 560. Using the graph on the next page, answer the following
questions (making sure to show your work): (a) What is the level of supply given the above scenario? 77 (b) What is the market-clearing pn'ee (m the competitive equilibrium price) given the above
scenario? ‘ ' ., i _ f w W PM
(c) Is there a surplus produced and, if so, how much?
77 I 44} 2: 33
(d) What is the total amount of deﬁciency payment?
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(e) What is the total aggregate mks; revenue generated given the above scenario, i.e., how
much did producers earn from selling their production on the market? I 7 74M , p1 . I :2?
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IIIIiI I” Name: 4. Assume that you are producing a commodity that is involved in a farm program. The target
price is $54 and the loan rate is 340. Using the graph below, answer the following questions
(making sure to show your work): _ (a) What is the level of supply given the above scenario? 57 (b) What is the total amount of deﬁciency payment? Pﬁzé-MW‘ IIIIIIIIIIIIIIIIII
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- Spring '99
- MacDougall