User Account

All Pages

Price floor , economics, Microeconomics

Assignment Help:
Suppose that the U.S. Department of Agriculture (USDA) administers the price floor for cheese, set at $0.17 per pound of cheese. (The price floor is officially set at $16.10 per hundredweight of cheese. One hundredweight is 100 pounds.) At that price, according to data from the USDA, the quantity of cheese produced in 2009 by U.S. producers was 212.5 billion pounds, and the quantity demanded was 211 billion pounds. To support the price of cheese at the price floor, the USDA had to buy up 1.5 billion pounds of cheese. The accompanying diagram shows supply and demand curves illustrating the market for cheese.



a. In the absence of a price floor, how much consumer surplus is created? How much producer surplus? What is the total surplus









b. With the price floor at $0.17 per pound of cheese, consumers buy 211 billion pounds of cheese. How much consumer surplus is created now?












c. With the price floor at $0.17 per pound of cheese, producers sell 212.5 billion pounds of cheese (some to consumers and some to the USDA). How much producer surplus is created now?











d. How much money does the USDA spend on buying up surplus cheese?
1.5 billion pounds or $931,677,018.63





e. Taxes must be collected to pay for the purchases of surplus cheese by the USDA. As a result, total surplus (producer plus consumer) is reduced by the amount the USDA spent on buying surplus cheese. Using your answers for parts b—d, what is the total surplus when there is a price floor? How does this compare to the total surplus without a price floor from part a?

Related Discussions:- Price floor , economics

Cartle aiming joint profit, defination,characters,examples,graphs,share,eff...

defination,characters,examples,graphs,share,effort

Explain the generalised least square procedure, (a) What is  meant by heter...

(a) What is  meant by heteroscedasticity and what are the consequences of applying OLS estimation in its presence? (b) Explain in details the Generalised least Square procedure

Creating mobile telephone infrastructure, Creating Mobile Telephone Infrast...

Creating Mobile Telephone Infrastructure: The second concept of subsidising the telecom infrastructure required for providing services in rural and remote areas is designed to

The free enterprise: price system, The Free Enterprise:  Price System ...

The Free Enterprise:  Price System The free market system is where the decision about what is produced is the outcome of millions of separate individual decisions made by cons

Mixed strategies, Find the best response functions and the mixed strategies...

Find the best response functions and the mixed strategies Nash Equilibrium if each player randomizes over his actions.

Conventions as a basis for forming expectations, Conventions as a Basis for...

Conventions as a Basis for Forming Expectations : Since there is little objective basis for probability distributions about future yields, decision-makers have to act on the ba

Materials requirements calculations - mrp system, Materials Requirements Ca...

Materials Requirements Calculations - MRP System MRP is a computer-based 'engine' which carries out calculations in order to determine:  What is needed, and When i

Applications, hey, I just have a question on how to apply things like ATC a...

hey, I just have a question on how to apply things like ATC and AVC in a problem. im just not too sure about what happens to the quantity of a particular good when asked. this is p

Microeconomic analysis, what is the theory of Second best? Prove the theore...

what is the theory of Second best? Prove the theorem with the help of a diagram.

Lechatliers principle, what is le''chatliers principle?

what is le''chatliers principle?

Write Your Message!

Captcha
Order Assignment

Featured Services

Order Now

Popular Subjects

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd