Answer questions 18. and 19. by referring to the graph below: $4 Price 2 0 100 2

Question

Answer questions 18. and 19. by referring to the graph below: $4 Price 2 0 100 200 300 400 500 600 Quantity (millions of bushels) 18 If the government the government need to purchase? a. None, no surplus will result. b. 100 million c. 200 million d. 600 million establishes a target price of $4.00, how many bushels will 19 If the government establishes a target price of $4.00, how much will the total deficiency payment to farmers be? a. $100 million b. $200 million c. $500 million d. $1,000 million

Explanation / Answer

18) 200 million because at price=4 there is excesa aupply of 200 million

19)500 because price increase=4-3=1 and qty=500 thus payment=500*1=500

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