Assume that Figure 8.12 (p. 263) depicts supply management in the Canadian dairy industry

Market InterventionAssume that Figure 8.12 (p. 263) depicts supply management in the Canadian dairy industry (i.e. a producer organization is able to limit supply to Q2). In Figure 8.12 how much does supply management increase producer surplus relative to perfect competition? Redraw the diagram with a much steeper (less elastic) demand curve and explain whether this less elastic demand curve would increase the gains to producers from supply management.Suppose the federal government decides to replace supply management with a price floor, pF, for Canadian dairy products. The government will buy any excess supply at that price and sell it in other countries. Is there a value for pF that makes both producers and consumers better off compared to the supply management outcome? Use a diagram to help explain your answerMonopoly. The demand for electricity in British Columbia is given by Q = 30 – 2P. The cost of providing the service is C = 20 + 5Q. Calculate the price and quantity under perfect competition and under monopoly. (Hint: Under perfect competition price must equal marginal cost.) Illustrate these prices and quantities in a diagram. Show the deadweight loss (DWL) due to monopoly in the diagram.Verify that MR=P(1+1/elastic) is true for both monopoly and perfect competition in this case. (Hint: Remember that a perfectly competitive firm faces a horizontal demand curve.)

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