After it was named a "superfood", demand for kale increased dramatically (some sources say by 60% between 2007 and 2012). The entry of numerous new kale farmers into the industry has made the market perfectly competitive. The Canadian government would like to support kale farmers by offering one of three policies/programs; all three programs would lead to an equilibrium market price of $2.25. Option A: introduce a price minimum or price floor Option B: introduce a price support Option C: introduce an incentive program Option D: introduce a payment in kind program As a fifth alternative, the government could also directly give farmers a monetary transfer that makes them just as well off as if the market price were $2.25, but without actually impacting the price or quantity. Option E: make a direct monetary transfer to farmers. Market demand and supply for kale is described as QD = 2,000 - 500P and Qs = 800 + 100P. Calculate the benefits to kale farmers offered by each of the programs described above. Round to the nearest cent, if necessary. Rank kale farmers' preference for the three options, from most preferred to least preferred.

After it was named a "superfood", demand for kale increased dramatically (some sources say by 60% between 2007 and 2012). The entry of numerous new kale farmers into the industry has made the market perfectly competitive. The Canadian government would like to support kale farmers by offering one of three policies/programs; all three programs would lead to an equilibrium market price of $2.25. Option A: introduce a price minimum or price floor Option B: introduce a price support Option C: introduce an incentive program Option D: introduce a payment in kind program As a fifth alternative, the government could also directly give farmers a monetary transfer that makes them just as well off as if the market price were $2.25, but without actually impacting the price or quantity. Option E: make a direct monetary transfer to farmers. Market demand and supply for kale is described as QD = 2,000 - 500P and Qs = 800 + 100P. Calculate the benefits to kale farmers offered by each of the programs described above. Round to the nearest cent, if necessary. Rank kale farmers' preference for the three options, from most preferred to least preferred.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter6: Simple Pricing

Section: Chapter Questions

Problem 7MC

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