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

#titleELASTICITTY.., CONSIDER THE DEMAND CUVE Q=100-50P DRAW THE DEMAND CUR...

CONSIDER THE DEMAND CUVE Q=100-50P DRAW THE DEMAND CURVE AND INDICATE WHICH PORTION OF THE CURVE IS ELASTIC ,WHICH PORTION IS INELASTIC AND WHICH PORTION IS UNIT ELASTIC

represent the effect of an proportional tax on labor income, 1. Consider a...

1. Consider an individual facing a wage rate w . There's a total of 100 hours available for work or leisure in a week. (a) Represent his budget constraint graphically (b)

Define migration in microeconomics, Q. Define Migration in Microeconomics? ...

Q. Define Migration in Microeconomics? Migration:It's the movement of human beings from one country or region to another. Sometimes migration is motivated by economic factors (

Why we study micro econmics?, why we study micro econmics?

why we study micro econmics?

Perfect Competition, Consider the market for Kitty Litter. Assume this ind...

Consider the market for Kitty Litter. Assume this industry is purrfectly competitive and is presently in long-run equilibrium. Suppose people begin to prefer Dogs as pets and Cat

Elasticities of supply and demand, ELASTICITIES OF SUPPLY AND DEMAND ...

ELASTICITIES OF SUPPLY AND DEMAND Usually, elasticity is a measure of the sensitivity of one variable to the other. It told us the percentage change in one variable in re

Shape of f orbitals, show the shape of f orbitals?

show the shape of f orbitals?

Forest resources , Normal 0 false false false EN-IN X...

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

Oligopoly market, how to calculate out put and price

how to calculate out put and price

What is black economy, Defining black economy, If you pay your cleaner or ...

Defining black economy, If you pay your cleaner or builder in cash or for some reason neglect to tell the taxman which you were paid for a service rendered, you participate in the

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