Final answer:
The implementation of a price cap on corn at INR 2000 per Quintal will likely result in a surplus, as the quantity of corn supplied will exceed the quantity demanded, leading to market inefficiencies similar to those observed in European wheat markets with government price interventions.
Step-by-step explanation:
The question asks about the welfare effects of a policy that puts a price cap of INR 2000 per Quintal on the price farmers can charge for corn, given the market demand and supply functions.
Using the provided figures and general economic principles, the policy would lead to a quantity supplied in excess of the quantity demanded at the capped price, creating a surplus.
This outcome is similar to the scenario depicted in the figures where government intervention keeps the price for wheat above the market equilibrium level, causing a surplus.
In the case of corn, the introduction of the price cap may lead to a situation where the market no longer clears, and the actual transaction price can be different from the price cap if a surplus drives prices down in competitive markets or if farmers limit supply to maintain higher prices.