The demand and supply of corn are as follows: Qd = 2,100-125P Qs = 600+ 175P, where quantities are in millions of bushels and prices are in dollars per bushel. (a) Assume that the government introduces a price floor of $8 per bushel. Assume that suppliers produce the quantity that consumers will buy at the resulting price. Calculate: (i) the change in the consumer surplus. (ii) the change in the producer surplus. (iii) the deadweight loss (b) ALTERNATIVELY, assume that the government introduces a price floor of $8 per bushel, but suppliers produce the quantity that they are WILLING to sell at the resulting price. Calculate: (i) the change in the consumer surplus (ii) the change in the producer surplus (iii) the deadweight loss (c) ALTERNATIVELY, assume that the government supports a price of $8 per bushel by buying the resulting excess supply. Calculate:

The demand and supply of corn are as follows: Qd = 2,100-125P Qs = 600+ 175P, where quantities are in millions of bushels and prices are in dollars per bushel. (a) Assume that the government introduces a price floor of $8 per bushel. Assume that suppliers produce the quantity that consumers will buy at the resulting price. Calculate: (i) the change in the consumer surplus. (ii) the change in the producer surplus. (iii) the deadweight loss (b) ALTERNATIVELY, assume that the government introduces a price floor of $8 per bushel, but suppliers produce the quantity that they are WILLING to sell at the resulting price. Calculate: (i) the change in the consumer surplus (ii) the change in the producer surplus (iii) the deadweight loss (c) ALTERNATIVELY, assume that the government supports a price of $8 per bushel by buying the resulting excess supply. Calculate:

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter16: Public Goods And Public Choice

Section: Chapter Questions

Problem 14PAE

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