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

Partial input elasticity of output, Partial Input Elasticity of Output:   ...

Partial Input Elasticity of Output:   This is a short-run concept which deals with the variability of only one factor keeping the others constant. There are three kinds of retu

Protec tionism and free trade, what is the south africas governments standp...

what is the south africas governments standpoint on international trade

How end of the productivity slowdown - us economy, The End of the Productiv...

The End of the Productivity Slowdown As computers improved and spread throughout the U.S. economy in 1970's and 1980's economists kept waiting to see the wonders of computing

Movements in demand, diagram of extension and contraction in demand?

diagram of extension and contraction in demand?

Basics of theory of demand, Basics of Theory of demand: The most famou...

Basics of Theory of demand: The most famous approach in the history of consumer behaviour, after indifference curve approach, is the revealed preference approach. In the revea

Linkage of education with poverty and income distribution, Normal 0 ...

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

Work plan and gantt chart, Once the organization has decided to move forwar...

Once the organization has decided to move forward with the development of a new or modified system, it is time to determine what tasks are necessary to move the project from initia

Evaluate the demand function, Lab Exercise 1. Taco Del Mar has completed a ...

Lab Exercise 1. Taco Del Mar has completed a study of weekly demand for its tacos in Washington State's regional markets.  The study developed the following demand function: Q =

Introduction, b) Sally’s firm produces granola bars with a fixed cost of 10...

b) Sally’s firm produces granola bars with a fixed cost of 10 (this cost is already sunk). Her variable cost function is VC = q2 + 2q. Assuming the market for granola bars is comp

3rd degree price discrimination(monopoly), What is third degree price discr...

What is third degree price discrimination? Explain with case analysis,give two successful & unsuccessful cases of 3rd degree price discrimination.

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