Economi All parts The demand and supply of corn are as follows:Qd = 2,100-125PQs = 600 + 175P,where quantities are in millions of bushels and prices are in dollars per bushel.(a) Assume that the government introduces a price floor of $8 per bushel. Assume that suppliers produce the quantity that consumers will buy at the resulting price. Calculate:(i) the change in the consumer surplus.(ii) the change in the producer surplus.(iii) the deadweight loss(b) ALTERNATIVELY, assume that the government introduces a price floor of $8 per bushel, but suppliers produce the quantity that they are WILLING to sell at the resulting price. Calculate:(i) the change in the consumer surplus(ii) the change in the producer surplus(iii) the deadweight loss(c) ALTERNATIVELY, assume that the government supports a price of $8 per bushel by buying the resulting excess supply. Calculate:(i) the change in the consumer surplus(ii) the change in the producer surplus(iii) the cost to the government(iv) the deadweight loss(d) ALTERNATIVELY, assume that the government introduces a production quota of 1.35 billion bushels, i.e., Q = 1,350. Calculate:(i) the change in the consumer surplus(ii) the change in the producer surplus(iii) the deadweight loss(e) ALTERNATIVELY, assume that the government gives producers FINANCIAL INCENTIVES to limit output to 1.35 billion bushels, i.e., Q = 1,350. Calculate:(i) the change in the consumer surplus(ii) the change in the producer surplus(iii) the cost to the government(iv) the deadweight loss

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The demand and supply of corn are as follows: Qd = 2,100 125P Qs = 600 + 175P, where quantities are in millions of bushels and prices are in dollars per bushel. (a) Assume that the government introduces a price floor of $8 per bushel. Assume that suppliers produce the quantity that consumers will buy at the resulting price. Calculate: (i) the change in the consumer surplus. (ii) the change in the producer surplus. (iii) the deadweight loss

The demand and supply of corn are as follows: Qd = 2,100 125P Qs = 600 + 175P, where quantities are in millions of bushels and prices are in dollars per bushel. (a) Assume that the government introduces a price floor of $8 per bushel. Assume that suppliers produce the quantity that consumers will buy at the resulting price. Calculate: (i) the change in the consumer surplus. (ii) the change in the producer surplus. (iii) the deadweight loss

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter6: Simple Pricing

Section: Chapter Questions

Problem 8MC

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The demand and supply of corn are as follows: Qd = 2,100 - 125P Qs = 600 + 175P, where quantities are in millions of bushels and prices are in dollars per bushel. (a) Assume that the government introduces a price floor of $8 per bushel. Assume that suppliers produce the quantity that consumers will buy at the resulting price. Calculate: (i) the change in the consumer surplus. (ii) the change in the producer surplus. (iii) the deadweight loss (b) ALTERNATIVELY, assume that the government introduces a price floor of $8 per bushel, but suppliers produce the quantity that they are WILLING to sell at the resulting price. Calculate: (i) the change in the consumer surplus (ii) the change in the producer surplus (iii) the deadweight loss (c) ALTERNATIVELY, assume that the government supports a price of $8 per bushel by buying the resulting excess supply. Calculate: (i) the change in the consumer surplus (ii) the change in the producer surplus (iii) the cost to the…
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