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

Deviation, Deviation - Difference between the expected and actual payof...

Deviation - Difference between the expected and actual payoff -  Adjusting for the negative numbers -  The standard deviation measures square root of average of squa

Marxisism, Hi, Can you help with writing journals homework? It should be in...

Hi, Can you help with writing journals homework? It should be in english as a second language. Ten pages different topics about Karl Marx economics views. I will give you the t

Market structure, illustrate and discuss implications of various market str...

illustrate and discuss implications of various market structure(non competitive and competitive) for price determination

ECO 204 Final Paper, Review the following information pertaining to the pot...

Review the following information pertaining to the potato chip industry and answer the questions below in a five to six double spaced page paper (not including title and reference

Discuss the advantages and disadvantages of rate regime, Discuss the advant...

Discuss the advantages and disadvantages in having a managed exchange rate regime. Advantages of a managed/fixed exchange rate Predictability and certainty a) Fi

Quantity pricing, 1. Sam Smith owns an internet radio company that has subs...

1. Sam Smith owns an internet radio company that has subscribers in Houston and Dallas. The demand functions for the 2 markets are: Q(Houston) = 50-0.35P(Dallas) Q(Dallas) = 80-0.

Assignment, Ask qu a.Fill in the column of marginal products. What pattern ...

Ask qu a.Fill in the column of marginal products. What pattern do you see? How might you explain it? b. A worker costs $30 per day and the ''Firm has fixed costs of $10. Use this

Central problems of an economy, explain economic growth

explain economic growth

Markets, Syndicated and organized oligopoly

Syndicated and organized oligopoly

Cost considerations for managers, Some Cost Considerations for Managers ...

Some Cost Considerations for Managers * Three guidelines for estimating the marginal cost(MC): 1) Average variable cost should not be used as substitute for the marginal cost(

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