. Suppose the government buys up all of the farmers' output at the floor price and then sells the output to consumers at whatever price it can get. Under this scheme, what is the price at which the government will be able to sell off all of the output it had purchased from farmers? What is the revenue received from the government's sale? 2.In this problem we have considered two government schemes: (1) a price floor is established and the government purchases any excess output and (2) the government buys all the farmers' output at the floor price and resells at whatever price it can get. Which scheme will taxpayers prefer?
(Dollars) |
Quantity demanded (kilos) |
Quantity supplied (kilos) |
---|---|---|
$2 |
40,000 |
0 |
4 |
34,000 |
4,000 |
6 |
28,000 |
8,000 |
8 |
24,000 |
16,000 |
10 |
20,000 |
20,000 |
12 |
18,000 |
28,000 |
14 |
12,000 |
36,000 |
16 |
6,000 |
40,000 |
Refer to Table , which contains information about the corn market. An agricultural
1. Suppose the government buys up all of the farmers' output at the floor price and then sells the output to consumers at whatever price it can get. Under this scheme, what is the price at which the government will be able to sell off all of the output it had purchased from farmers? What is the revenue received from the government's sale?
2.In this problem we have considered two government schemes: (1) a price floor is established and the government purchases any excess output and (2) the government buys all the farmers' output at the floor price and resells at whatever price it can get. Which scheme will taxpayers prefer?
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