Calculate change in producer surplus due to price ceiling

Reference no: EM13798517

Consider the market for soybeans illustrated in the figure below. Assume the market is initially in equilibrium. Food prices have been rising faster than composite prices as measured by the Consumer Price Index (CPI). Suppose to limit rising food prices, policymakers regulate a price ceiling of $3.00 per bushel of soybeans.

a) Calculate the change in producer surplus due to the price ceiling.

b) Calculate the change in consumer surplus due to the price ceiling.

c) Does the price ceiling create deadweight loss? If so, how much?

Reference no: EM13798517

Questions Cloud

Identify the forecasting model : Discuss whether you would recommend this quantity as the manufacturing plan or the quantity found using the simple three year moving average in step two and why.

Job to encourage and develop motivation for employees : Devise a plan to redesign a job of your choice within the organization, outlining the steps that the organization would need to take to redesign the job to encourage and develop motivation for employees.

Propose for de beers in terms of growing : What solutions would you propose for De Beers in terms of growing and amid government nterventiosn?

Analyze the major short run and long cost functions : Determine the possible circumstances under which the company should discontinue operations - Analyze the major short run and long cost functions for the low-calorie, frozen microwaveable food company given the cost functions.

Calculate change in producer surplus due to price ceiling : Calculate the change in producer surplus due to the price ceiling - Calculate the change in consumer surplus due to the price ceiling.

Can the market system of supply and demand eliminate : Issues for investigation: "The business cycles of American Capitalism are directly responsible for the inadequate income distribution and poverty in the United States. The business cycles constantly target the same income groups.

Describe the difference between efficiency and effectiveness : Describe the difference between efficiency and effectiveness in a business. Choose a business with which you have some familiarity and describe the division of labor. Give at least three examples. How might this division of labor be improved

How us deficit have effect on future medicare users : what happens when there is a surplus of imports brought into the U.S.? Cite a specific example of a product with an import surplus, and the impact that has on the U.S. businesses and consumers involved?

How might any of concepts be related to explanatory hypothes : Propose the concepts and constructs you might use to study this phenomenon; B.) How might any of these concepts and/or constructs be related to explanatory hypothesis?

User Account

All Pages