Assume a market intervention of the form of a price floor. the price floor is set at p=$3.5. this price floor is binding, so it has an impact on the equilibrium of the economy.

1. How many units of the goods the producers are willing to supply the market at the considered market intervention?

2. How many units of the goods the consumers are willing to demand the market at the considered market intervention?

3. At price ceiling of $3.5 there is:

a. competitive equilibrium in the market;

b. excess supply in the market;

c. excess demand in the market;

d. rationing in the market;

4. What is the value of the consumer surplus considering this market intervention?

5. What is the value of the producer surplus considering this market intervention?

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