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

Define about mutual fund, Q. Define about Mutual Fund? Mutual Fund: A f...

Q. Define about Mutual Fund? Mutual Fund: A financial vehicle that involves pooling investments in the shares of many different joint stock (or publicly traded) companies, in o

Elasticity, what are the uses of elasticity to the private sector

what are the uses of elasticity to the private sector

Indifference curve, Demonstrate mathematically that the equilibrium condit...

Demonstrate mathematically that the equilibrium condition MRS  PB PA is the equivalent of the utility-maximizing rule MU AP A  MU B PB .

Workers'' co-operative, Workers' Co-operative: Another form of privat...

Workers' Co-operative: Another form of privatisation is transfer ofownership of a loss-making concern to the workers. Mr. R. Ganpati, formerChairman of the Board of Industria

Statistics, please can you explainn what "down 0.1 percentage point on the ...

please can you explainn what "down 0.1 percentage point on the quarter means"?

Ic, consumer equilibrium by indiffrence curve approach

consumer equilibrium by indiffrence curve approach

Protectionism and free trade, reasons for and against free trade with forei...

reasons for and against free trade with foreign sector

Large economies of scale, is the industry of electric power on the large e...

is the industry of electric power on the large economies scale

How do we obtain total cost curve, Total cost curve (TC) is obtained by add...

Total cost curve (TC) is obtained by adding up vertically total fixed cost and total variable cost curves because the total cost is sum of total fixed cost and total variable cost

Demand and supply, identify which curve (demand or supply) will be affected...

identify which curve (demand or supply) will be affected?

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