For the last 70 years the Canadian government has used price supports to provide income assistance to
Question:
a. If the government sets a price floor of $5 per bushel, how many bushels of corn are produced? How many are purchased by consumers? By the government? How much does the program cost the government? How much revenue do corn farmers receive?
b. Suppose the government sets a target price of $5 per bushel for any quantity supplied up to 1 000 bushels. How many bushels of corn are purchased by consumers and at what price? By the government? How much does the program cost the government? How much revenue do corn farmers receive?
c. Which of these programs (in parts a and b) costs corn consumers more? Which program costs the government more? Explain.
d. Is one of these policies less inefficient than the other? Explain.
Step by Step Answer:
Macroeconomics
ISBN: 978-1319120054
3rd Canadian edition
Authors: Paul Krugman, Robin Wells, Iris Au, Jack Parkinson