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- Assume that the government sets a price floor in the market for wheat and the price floor is set below themarket equilibrium of wheat. Discuss carefully THREE points showing effectiveness of this policy on the market.Assume that the government sets a price floor in the market for wheat and the price floor is set below themarket equilibrium of wheat. Discuss carefully THREE points showing effectiveness of this policy on the market. Please provide with 3 pointsAssume that the government sets a price floor in the market for wheat and the price floor is set below themarket equilibrium of wheat. Discuss carefully the effectiveness of this policy on the marke
- Indian government realized free market price of wheat is very low. To increase farmers’ welfare government took the following steps: a) Suppose the government imposes a binding price floor in the wheat market. How this policy will affect the price, quantity demanded and quantity supplied of wheat. b) Wheat farmers complained that this binding price floor reduced their revenue. Explain how it reduced their revenue. c) In response to wheat farmers’ complaints, government purchases all the surplus quantity at the minimum price decided by the government. Who are the beneficiaries and who loses due to this price floor?A) If a price ceiling were to be imposed at “Pc” – which indicated area(s) would represent the consumer surplus and producer surplus? B) If the price ceiling was still in effect at “Pc”, what area would represent the potential “black market” which could arise? What would be the price and quantity sold in the “black market”?Consider the market for paper towels where the supply curve is upward sloping and the demand curve is downward sloping. a. Suppose there is an effective price ceiling applied on this market. What happens to the consumer surplus as a result? b. Suppose there is an effective price floor applied on this market. What happens to the consumer surplus as a result?
- please show all workingQuestion 1 (a) Assume that the markets for sugar cane, rum and whiskey are initially in equilibrium. Sugar cane is a principal ingredient in rum, but it is not an ingredient in whiskey.Rum and whiskey are substitutes in consumption. The government implements a price restriction in the sugar cane market with the aim of protecting the farmers.(i) What type of price restriction is implemented by the government? Explain. (ii) Discuss the effect on each market if the government implements a price restriction in the sugar cane market with the aim of protecting the farmers. (iii) Illustrate the effect on each market if the government implements a price restriction in the sugar cane market with the aim of protecting the farmers.A market is described by the following supply and demand curves: QS=2P andQD =300-2Pa. Solve for the equilibrium price(in $) and quantity.b. Two policies have been suggested to the government i) a price floor of $90 or anii)price ceiling of $90. Which policy government can take and why?c. For the adopted policy in b) what will be the price, quantity demand, quantitysupply, shortage, and surplus?Assume that the markets for sugar cane, rum, and whiskey are initially in equilibrium (i.e., supply equals demand in each case). Assume further that a good harvest impacts the world’s sugar cane crop. Sugar cane is a principal ingredient in rum, but it is not an ingredient in whiskey. Rum and whiskey are substitutes for consumption. 1. Discuss the effect on the markets for each of the three products if the government implements a price restriction (price floor) in the sugarcane market with the aim of protecting the farmers. 2. How will this impact the revenues for sugar growers, rum producers, and whiskey producers?
- Plot the below demand and supply schedule. A. What is the market equilibrium? B. Describe the situation at a price of $9. Describe the situation at a price of $3. What will occur? (Show both situations on your graph). If shortage or surplus, how will the price adjust?C. Suppose the government imposed a minimum price of $10. What would occur? Illustrate (show on your graph). Is the situation that results temporary or permanent? Explain D. Indicate what the price would have to be to represent an effective price ceiling (show on your graph). Is the shortage that results temporary or permanent? Explain Price Quantity Demanded Quantity Supplied $1 1000 200 $2 800 240 $3 700 300 $4 640 400 $5 600 600 $6 550 820 $7 520 1000 $8 460 1300 $9 400 1600 $10 300 1950Assume that the government sets a price floor in the market for wheat and the price floor is set below the market equilibrium of wheat. Discuss carefully by providing three points the effectiveness of this policy on the marketThe government imposes a price floor in the market for peanuts in order to stabilize or raise farmer's incomes. a) what is the impact on consumer surplus and producer surplus. b) what would happen to the quantity demanded and the quantity supplied of peanuts? c) would the amount of market exchange increase or decrease or remain the same. Please support answers with graph and explain.