Suppose now that the government decides to protect its, Ask an Expert

Economics

Suppose the government gives a guaranteed minimum price for sugar of $.25 cents a pound - and agrees to purchase any surplus which is subsequently destroyed.

Demand and Supply are:
Qd = 200,000 - 350,000P
Qs = 650,000P

What is the change in consumer surplus following this government intervention? The change in producer surplus? Cost to government?

What is the deadweight loss compared to a perfectly competitive market?

Suppose now that the government decides to protect its budget and use production quotas instead.

If they want a price of $0.25 per pound, what should the production quota be?

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M959880

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