1 94%No Service10:23 АМHW 1.pdfIV. Price ControlPrice Per BushelQuantity DemandedQuantity Supplied(dollars)36,000030,0002,000625,0005,00061220,00010,0001516,00016,0001813,00023,0002130,0008,000243,00036,000An agricultural price floor is a price that the government guarantees farmers will receive for aparticular crop. Suppose the federal government sets a price floor for wheat at $21 per bushel3a) Draw supply and demand curves for the agricultural crop. Show how the equilibrium priceand quantity will be affected by the price floor (be sure to label the axis)b) If the government agrees to purchase any surplus output at $21, how much will it cost thegovernment?c) If the government buys all of the farmers' output at the floor price, how many bushels ofwheat will it have to purchase and how much will it cost the government?d) Suppose the government buys up all of the farmers' output at the floor price and then sellsthe output to consumers at whatever price it can get. Under this scheme, what is the priceat which the government will be able to sell off all of the output it had purchased fromfarmers? What is the revenue received from the government's sale?e) In this problem we have considered two government schemes: (1) a price floor isestablished and the government purchases any excess output and (2) the government buysall the farmers' output at the floor price and resells at whatever price it can get. Whichscheme will the farmers prefer? Which scheme will wheat buyers prefer?

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Asked Sep 24, 2019
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Question 5 B-D I don’t know how to graph 

1 94%
No Service
10:23 АМ
HW 1.pdf
IV. Price Control
Price Per Bushel
Quantity Demanded
Quantity Supplied
(dollars)
36,000
0
30,000
2,000
6
25,000
5,000
6
12
20,000
10,000
15
16,000
16,000
18
13,000
23,000
21
30,000
8,000
24
3,000
36,000
An agricultural price floor is a price that the government guarantees farmers will receive for a
particular crop. Suppose the federal government sets a price floor for wheat at $21 per bushel
3
a) Draw supply and demand curves for the agricultural crop. Show how the equilibrium price
and quantity will be affected by the price floor (be sure to label the axis)
b) If the government agrees to purchase any surplus output at $21, how much will it cost the
government?
c) If the government buys all of the farmers' output at the floor price, how many bushels of
wheat will it have to purchase and how much will it cost the government?
d) Suppose the government buys up all of the farmers' output at the floor price and then sells
the output to consumers at whatever price it can get. Under this scheme, what is the price
at which the government will be able to sell off all of the output it had purchased from
farmers? What is the revenue received from the government's sale?
e) In this problem we have considered two government schemes: (1) a price floor is
established and the government purchases any excess output and (2) the government buys
all the farmers' output at the floor price and resells at whatever price it can get. Which
scheme will the farmers prefer? Which scheme will wheat buyers prefer?
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1 94% No Service 10:23 АМ HW 1.pdf IV. Price Control Price Per Bushel Quantity Demanded Quantity Supplied (dollars) 36,000 0 30,000 2,000 6 25,000 5,000 6 12 20,000 10,000 15 16,000 16,000 18 13,000 23,000 21 30,000 8,000 24 3,000 36,000 An agricultural price floor is a price that the government guarantees farmers will receive for a particular crop. Suppose the federal government sets a price floor for wheat at $21 per bushel 3 a) Draw supply and demand curves for the agricultural crop. Show how the equilibrium price and quantity will be affected by the price floor (be sure to label the axis) b) If the government agrees to purchase any surplus output at $21, how much will it cost the government? c) If the government buys all of the farmers' output at the floor price, how many bushels of wheat will it have to purchase and how much will it cost the government? d) Suppose the government buys up all of the farmers' output at the floor price and then sells the output to consumers at whatever price it can get. Under this scheme, what is the price at which the government will be able to sell off all of the output it had purchased from farmers? What is the revenue received from the government's sale? e) In this problem we have considered two government schemes: (1) a price floor is established and the government purchases any excess output and (2) the government buys all the farmers' output at the floor price and resells at whatever price it can get. Which scheme will the farmers prefer? Which scheme will wheat buyers prefer?

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Expert Answer

Step 1

Hey, Thank you for the question. According to our policy we can only answer 3 subparts per question. If you need further help, post the question again and mention the subpart you want us to solve. Also, since you have asked for the graph, we will answer subparts a,b,c for you.

Step 2

a)

When government imposes price floor, the equilibrium price is $15 which now increases to $21. There will be excess of supply as the price is above the equilibrium level, the quantity demanded at this price level is 8000 units and the quantity supplied is 30000 units. There is an excess supply of 22000 units (30000-8000)

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Price (S Supply supply excess 21 15 Demand 16 SO Quantity in thousands 90

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Step 3

b)

If the government decides to purchase excess of the product at floor pric...

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