Rice farmers find that for each $.05 increase in the gov- ernment mandated price, each farmer's revenues increase by $50,000.The lobbying cost per farmer for each $.05 increment in price support is increasing, as illustrated in the table below, because convincing additional politicians with less interest in the rice industry becomes increasingly expensive. Plot the marginal revenue per increase in the subsidy and the marginal cost per farmer in a diagram, and identify the level of subsidy worth lobbying for.
Subsidy per Marginal Cost of
Bushel Lobbying per Farmer
0.00 $0
0.05 5,000
0.10 15,000
0.15 30,000
0.20 50,000
0.25 75,000
0.30 105,000