Rice farmers find that they face the market conditions il- lustrated in the table on the next page. Plot the demand and supply curves given these data. Identify the market equilibrium price and quantity. Rice farmers are well or- ganized, and have promoted rice consumption with their ad campaign "Rice is nice." Despite this effort, they are not satisfied with the market price and they successfully lobby the government for a price support of $0.80 per bushel. Show the quantity that would be supplied and the quantity that would be demanded at this government- mandated price.
Quantity
(millions of Price per Marginal Cost bushels) Bushel per Bushel
0 - $0.00
1 $1.00 0.20
2 0.90 0.40
3 0.80 0.60
4 0.70 0.80
5 0.60 1.00
6 0.50 1.20