In the US cotton market, there are 500 identical competitive farms, each farm having

Question: In the US cotton market, there are 500 identical competitive farms, each farm having the cost function ( C(q)=162 10 q 0.5 q^{2} ) where ( q ) is the quantity of cotton in tons produced by each farm. The market demand curve is given by ( Q^{d}=10,400-50 p ). (a) Calculate the market equilibrium price ( p^{*} ). (b) Suppose the government gives each
Show transcribed image text 100% (1 rating)Please gi…View the full answerTranscribed image text: In the US cotton market, there are 500 identical competitive farms, each farm having the cost function C(q)=162 10q 0.5q2 where q is the quantity of cotton in tons produced by each farm. The market demand curve is given by Qd=10,400−50p. (a) Calculate the market equilibrium price p∗. (b) Suppose the government gives each farm a subsidy of $8 per ton. Calculate the longrun market price. (c) How many farmers will there be in the cotton market in the long run?

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