The market demand function for wheat is Qd = 10 - 2P and the market supply function is Qs = 4P - 2, both measured in billions of bushels per year. Suppose the government wants to increase the price of wheat to $3/bushel and they impose a voluntary production reduction program to achieve their goal. What is the size of the producer surplus?
A. $8 billion
B. $4.5 billion
C. $12.5 billion
D. $6.5 billion
C. $12.5 billion
Economics
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