2. Consider a market for portable water pump with demand equal to p = 2340 - 4.5Q and supply equal to p = 10 + 6.7Q. This pump is an essential equipment for farmers to provide water to their vegetable farms, and many farmer could not afford buy the pumps. The government decides to offer a subsidy to purchase the pumps to help the farmers. The subsidy is $150 and is paid to the sellers. A. Find the market equilibrium price and quantity. B. Determine the subsidized price to the farmers and the price received by the sellers. C. Find the total subsidy expenditure and the excess burden of the subsidy.

2. Consider a market for portable water pump with demand equal to p = 2340 - 4.5Q and supply equal to p = 10 + 6.7Q. This pump is an essential equipment for farmers to provide water to their vegetable farms, and many farmer could not afford buy the pumps. The government decides to offer a subsidy to purchase the pumps to help the farmers. The subsidy is $150 and is paid to the sellers. A. Find the market equilibrium price and quantity. B. Determine the subsidized price to the farmers and the price received by the sellers. C. Find the total subsidy expenditure and the excess burden of the subsidy.

Principles of Economics (MindTap Course List)

8th Edition

ISBN:9781305585126

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter7: Consumers, Producers, And The Efficiency Of Markets

Section: Chapter Questions

Problem 6PA

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