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Suppose that the government decides to guarantee and above-market price for a good by buying up and surplus ar the above-market price. Using a conventional supply- demand diagram, illustrate the following gains and losses from such a price support:
a. The loss of consumer surplus
b. The gain of producer surplus in the short run
c. The cost of running the government program ( assuming no storage costs)
d. Illustrate what is the total price of the program to consumers?
e. Are the total cost and benefits of the support program widespread concentrates?
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