What proportion would accrue to cotton buyers

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Demand for U.S. cotton has been estimated to have a price elasticity ?D,P equal to -1. Supply for U.S. cotton has been estimated to have a price elasticity ?S,P equal to 0.5. Suppose the government decides to subsidize cotton growers with a subsidy per bale of cotton. What proportion of the subsidy benefit would accrue to cotton growers? What proportion would accrue to cotton buyers?

Reference no: EM13213903

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