Consider the perfectly competitive market for potatoes with demand given by P = 30–2Q and supply given by P = 10 + 2Q. The government is considering implementing a per unit subsidy $8 (paid to farmers). What is the incidence of this subsidy? Group of answer choicesThe incidence of this subsidy to buyers is $2 and to sellers is $6.The incidence of this subsidy to buyers is $3 and to sellers is $5.The incidence of this subsidy to buyers is $0 and to sellers is $8.The incidence of this subsidy is equally distributed between the buyers and the sellers.None of the other answers are correct

Consider a perfectly competitive constant cost industry. If the government provides a subsidy toproducers of t per unit, in the long run the incidence of the subsidy willa) be split between the consumer and the producers.b) fall exclusively on the producers.c) fall exclusively on the consumers.d) cannot be determined based on the information provided.

A potato farmer is operating in a perfectly competitive market. The current market rate for each kilogram of potato at ₹40. He currently produces 1000 kilograms of potatoes and sells the entire produce within a day. The cost of producing an additional kilogram would be ₹30, and this cost will increase as he produces more and more potatoes (because he will have to start planting on less fertile land, which is more costly). Which of the following actions should he take?He should hoard his potatoes to reduce the supply in the market.He should reduce the amount of potatoes he produces to reduce costs.He should increase the amount of potatoes he produces despite increasing costs.He should charge ₹30 per kilo.

Multiple Choice QuestionWhich of the following suggests that farmers should obtain a constant ratio of the prices they receive for their farm products and the prices they pay for goods and services in general?Multiple choice question.An annual farm subsidyThe price-support systemThe parity conceptAn imposed price floor

The market demand and supply functions for potatoes are:QD = 2,000 - 500P and QS = 800 + 100P.To help potato producers, the government is considering legislation that would put a pricefloor at R2.25 per bag. If this price floor is implemented, determine (i) how many bags ofpotatoes will the government be forced to buy to keep the price at R2.25; (ii) how muchgovernment will spend in total; and (iii) how much producer- and consumer -surplus changes

1. Agricultural production is highly competitive for most commodities. Potatoes are no exception: price is determined by demand and supply. Based on statistics from the USDA, demand for table potatoes in the US is estimated to be: \[ Q_{D}=184-20 P \] where