Cheese at the price floor, Microeconomics

Assume 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 formally set at $16.10 per hundredweight of cheese. One hundred weights are 100 pounds.) At that price, according to data from the USDA, the quantity of cheese formed in 2009 by U.S. producers was 212.5 billion pounds, and the quantity demanded was 211 billion pounds. To maintain the price of cheese at the price floor, the USDA had to buy up 1.5 billion pounds of cheese. The accompanying diagram demonstrate 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 formed now

Posted Date: 3/23/2013 6:14:50 AM | Location : United States

Related Discussions:- Cheese at the price floor, Assignment Help, Ask Question on Cheese at the price floor, Get Answer, Expert's Help, Cheese at the price floor Discussions

Write discussion on Cheese at the price floor
Your posts are moderated
Related Questions

NETWORK EXTERNALITIES Till this point we have assumed that people's demands for good are independent of each other. Actually, a person's demand can be affected by the number

Principle Agent Problem [Dealing with hidden action] Assume that the employer (principle) wants its employee (agent) to work hard [You can safely assume that this maximizes th

Equity: The proportion of a company's total assets which are "owned" outright by the company's owners. A company's equity is equivalent to its value less its debt owed to bankers,

Explain the how the classical school views the role of markets and government intervention in fighting business cycles The classical school believes in the smooth functioning o

Draw an indifference curve for consumption and hours of work. (Hint: in class we discussed indifference curves for consumption and hours of leisure, this is different.)

oxidation state of f block elements

What are constant returns to scale? Constant returns to scale: A constant return to scale (CRS) implies that doubling inputs precisely double outputs, which is frequently a

Solve equation P=200-Qs and Qs=4.5p +5

difference between absolute advantage & comparative advantage theory