A price above equilibrium

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Reference no: EM13774327

Suppose the government sets an effective price floor (that is, a price above equilibrium) in the market for oranges and agrees to buy all oranges that go unsold at that price. The oranges purchased by the government are discarded.

a. Illustrate the number of oranges purchased by the government.

b. Illustrate the gains and losses to all relevant groups of Americans and the deadweight loss.

Graph (illustrate)

Reference no: EM13774327

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