Market demand and supply functions

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Q. The market demand and supply functions for pork are: QD = 2,000 - 500P and QS = 800 + 100P. To help pork manufacturer, the U.S. Congress is allowing for legislation that would put a price floor at $2.25 per unit. If this price floor is implemented, how many units of pork will the government are forced to buy to keep the price at $2.25? In total how much will the government spend? Illustrate how much does producer surplus increase? How much does consumer surplus decrease? And how much is the deadweight loss? Draw a diagram and show the initial equilibrium, new price and quantity with the price floor and identify the area of deadweight loss in the diagram.

Reference no: EM136943

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