The diagram below shows the competitive U.S. market for soybeans at equilibrium. Assume that farmers successfully lobby the U.S.government to impose a price floor of $20 per bushel. Answer the parts of the question below on the basis of this diagram.Ps (per bushel)$25$20Pe = $15$10$ 5DQeQs10 billion(bushels)U.S. Soybean Marketa)Redraw the market diagram and illustrate the deadweight loss that will result from the price floor. Fully and carefullyexplain what a deadweight loss entails, offering references to your diagram.b)With the price floor, there will likely be a misallocation of transactions on one side of the market. In other words, either thewrong suppliers will be able to sell their soybeans in the marketplace or the wrong demanders will be able to buy soybeans in themarketplace. Explain which of these will happen and how we know the allocation is not the best possible.

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The diagram below shows the competitive U.S. market for soybeans at equilibrium. Assume that farmers successfully lobby the U.S. government to impose a price floor of $20 per bushel. Answer the parts of the question below on the basis of this diagram.

The diagram below shows the competitive U.S. market for soybeans at equilibrium. Assume that farmers successfully lobby the U.S. government to impose a price floor of $20 per bushel. Answer the parts of the question below on the basis of this diagram.

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter5: Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 15PAE

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