If the subsidized price of wheat is $50 per bushel with 9,000 bushels supplied b

Question

If the subsidized price of wheat is $50 per bushel with 9,000 bushels supplied but only 2,500 bushels purchased and consumed at that price, what is the total cost to the government of the subsidy? How much is the total amount received by the farmers when taking into consideration consumers and the government? If the subsidized price of wheat is $50 per bushel with 9,000 bushels supplied but only 2,500 bushels purchased and consumed at that price, what is the total cost to the government of the subsidy? How much is the total amount received by the farmers when taking into consideration consumers and the government? If the subsidized price of wheat is $50 per bushel with 9,000 bushels supplied but only 2,500 bushels purchased and consumed at that price, what is the total cost to the government of the subsidy? How much is the total amount received by the farmers when taking into consideration consumers and the government?

Explanation / Answer

Since only 2500 bushels was purchased in the market. There is excess supply of 9000-2500=6500bushels which government has to purchased and govt. Subsidy amont given to farmer or producer of wheat=6500*50=325000

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