Question: Consider the market shown in the graph below. a. Compute the consumer surplus. b. Compute the producer surplus. Now assume that government puts a price

Consider the market shown in the graph below.

a. Compute the consumer surplus.
b. Compute the producer surplus.
Now assume that government puts a price floor on this product at $20 a unit.
c. Compute the new consumer surplus.
d. Compute the new producer surplus.
e. What group would tend to have their advocates or lobbyists support price floors?

30 25 S I 10 0 2 6 8 10 12 Quantity (thousands)

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