The government decides that the sugar price support program is getting too expensive. It abandons the support price program and instead assigns a marketing quota to each sugar producer. This quota gives the holder the right to sell sugar on the market and can be transferred to other producers. Altogether the quotas allocate to sugar growers add up to 9 million cwt. Please grab this problem, indicating clearly the market price and quantity.Not sure if this is necessary for the question but given is demand for sugar: Q= 20 - P Supply for sugar: Q = 2 + P quantities are in million hundredweight (cwt) and price is dollars per cwt.picture is of previous question that goes along to help answer with this one. I am needing help with number 3 that is pictured 1. What is the equilibrium price and quantity of sugar in the absence of anyagricultural policy?P= 9Q=112. If the government establishes a support price for sugar of $12 per cwt. (hundredpounds) and is willing to buy up any surplus sugar at that price, indicate on yourgraph the quantity supplied, quantity demanded, and quantity purchased by thegovernment. If the units are million cwt., how much money is required for thegovernment purchases? Show this amount on your graph.The equilibrium price is $9 per cwt. If the government fixes the price at $12 thenthere will be an excess of supply of sugar over demand. This means that P =$12, the demand for sugar is 8 million cwt where the quantity supplied is 14million cwt. There is then an excess supply of 6 million cwt of sugar (14-8 = 6). Ifthe government purchases that excess supply at a price of $12 per cwt, it wouldrequite $72 million for government purchases (12 x 6 = 72). The shaded part ofthe rectangle in the graph are government purchases.%3D3. The government decides that the sugar price support program is getting tooexpensive. It abandons the support-price program and instead assigns amarketing quota to each sugar producer. This quota gives the holder the right tosell sugar on the market and can be transferred to other producers. Altogetherthe quotas allocated to sugar growers add up to 9 million cwt. Please graph thisproblem, indicating clearly the market price and quantity.4. If there is a free market for renting quota, what is the maximum the quota shouldrent for per cwt? If a farmer with marginal production costs of $6 per cwt. ownedCunte ould it ho moro profitoblo for harthim to produce th oCu r or to ront the

As requested only question 3 will be answered here.

Answered: 3. The government decides that the…

Microeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter4: Demand And Supply: Applications And Extensions

Section: Chapter Questions

Problem 10CQ

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The government decides that the sugar price support program is getting too expensive. It abandons the support price program and instead assigns a marketing quota to each sugar producer. This quota gives the holder the right to sell sugar on the market and can be transferred to other producers. Altogether the quotas allocate to sugar growers add up to 9 million cwt. Please grab this problem, indicating clearly the market price and quantity.

Not sure if this is necessary for the question but given is

demand for sugar: Q= 20 - P
Supply for sugar: Q = 2 + P

quantities are in million hundredweight (cwt) and price is dollars per cwt.

picture is of previous question that goes along to help answer with this one. I am needing help with number 3 that is pictured

1. What is the equilibrium price and quantity of sugar in the absence of any
agricultural policy?
P= 9
Q=11
2. If the government establishes a support price for sugar of $12 per cwt. (hundred
pounds) and is willing to buy up any surplus sugar at that price, indicate on your
graph the quantity supplied, quantity demanded, and quantity purchased by the
government. If the units are million cwt., how much money is required for the
government purchases? Show this amount on your graph.
The equilibrium price is $9 per cwt. If the government fixes the price at $12 then
there will be an excess of supply of sugar over demand. This means that P =
$12, the demand for sugar is 8 million cwt where the quantity supplied is 14
million cwt. There is then an excess supply of 6 million cwt of sugar (14-8 = 6). If
the government purchases that excess supply at a price of $12 per cwt, it would
requite $72 million for government purchases (12 x 6 = 72). The shaded part of
the rectangle in the graph are government purchases.
%3D
3. The government decides that the sugar price support program is getting too
expensive. It abandons the support-price program and instead assigns a
marketing quota to each sugar producer. This quota gives the holder the right to
sell sugar on the market and can be transferred to other producers. Altogether
the quotas allocated to sugar growers add up to 9 million cwt. Please graph this
problem, indicating clearly the market price and quantity.
4. If there is a free market for renting quota, what is the maximum the quota should
rent for per cwt? If a farmer with marginal production costs of $6 per cwt. owned
Cunte ould it ho moro profitoblo for harthim to produce th oCu r or to ront the

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