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

Linear demand curves, Below are three questions. WRITE A BRIEF NOTE OF EXPL...

Below are three questions. WRITE A BRIEF NOTE OF EXPLANATION IN ANSWER TO EACH PART OF EACH QUESTION. The marks awarded will depend on the quality of the reasoning exhibited and th

Homework, the difference between an lc3 and other types of businesses is th...

the difference between an lc3 and other types of businesses is that

The hypothesis of inflation-unemployment trade-off, The Hypothesis of Infla...

The Hypothesis of Inflation-Unemployment Trade-off : This hypothesis about formation of expectations is therefore known as the hypothesis of adaptive expectations. The hypothes

Theory, who propounded the pure international theory of trade?

who propounded the pure international theory of trade?

Microeconomics, compare the concept of MRTS with the MRS and discuss the si...

compare the concept of MRTS with the MRS and discuss the similarities and difference between them?

Monopoly, what is multi-plant monopoly?

what is multi-plant monopoly?

Equilibrium, Equilibrium is explained as follows: Equilibrium is the st...

Equilibrium is explained as follows: Equilibrium is the state in which there are no shortages and surpluses; or we can say that the quantity demanded is equal to the quantity s

Market supply of labour, #queUse a graphical illustration to describe brief...

#queUse a graphical illustration to describe briefly what the influence of each of the following would be on the market supply of labor:(a) an increase in immigration (b) more wome

Which of these will be included in US GDP for 2005, Which of these will be ...

Which of these will be included in US GDP for 2005? a) A car produced in Japan in 2005 and sold in the US in 2005 b) A car produced in the US in 2004 and sold in Japan in 2005 c) A

Allocation of a countrys resources to the price mechanism, What are the adv...

What are the advantages of leaving the allocation of a countrys resources to the price mechanism? Ans) The main conditions needed are: 1. Either a finite number of agents or pr

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