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Refer to the table below. Suppose that the government establishes a price ceiling of $3.70 for wheat.
Thousands of Bushels Demanded
Price per Bushel
Thousands of Bushels Supplied
85
$3.40
72
80
3.70
73
75
4.00
70
4.30
77
65
4.60
79
60
4.90
81
What might promote the government to establish this price ceiling? Explain carefully the main effects. Next, suppose that the government establishes a price floor of $4.60 for wheat. What will be the main effects of this price floor? Include a graphical representation in your answer.
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