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The US government of agriculture is interested in analyzing the domestic market for corn.

The US government of agriculture is interested in analyzing the domestic market for corn. The USDA staff economist estimates the following equations for the demand and supply Qd=1,600-125P Qd=440+165P Quantities are measured in millions of bushels , prices are measured in dollars per bushel. 1. Calculate the equilibrium price and quantity that will prevail under a completely free market 2.calculate the price elasticity of supply and demand at the equilibrium . 3. The government currently has a $4.5 bushel support price in place. What impact will this support price have on the market? Will the government be forced to purchase corn under a program that requires them to buy up any surplus? If so how much?

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Part One Qd=1,600-125P Qd=440+165P At the equilibrium,the quantity Qd=Qs 1600-125P=440+165P 1600-440=165P+125P P=$6.12... View the full answer

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