Using Supply and Demand to Analyze Markets - End of Chapter Problem The diagram below illustrates the market for beef. Suppose the government has instituted a price support program for beef by placing a price floor at $4.00 per pound. Under the program, any unsold beef will be purchased by the government and destroyed. Answer the following questions about the impacts of this program. Price ($/pound) $4 3 0 0.5 1.5 S D Quantity of beef (millions

Using Supply and Demand to Analyze Markets - End of Chapter Problem The diagram below illustrates the market for beef. Suppose the government has instituted a price support program for beef by placing a price floor at $4.00 per pound. Under the program, any unsold beef will be purchased by the government and destroyed. Answer the following questions about the impacts of this program. Price ($/pound) $4 3 0 0.5 1.5 S D Quantity of beef (millions

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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Question

c. How much do producers gain in surplus?
d. What is the loss to society of the beef program?
Increase in Producer Suplus: $
Loss to society: $

Using Supply and Demand to Analyze Markets - End of Chapter Problem
The diagram below illustrates the market for beef. Suppose the government has instituted a price support program for beef by
placing a price floor at $4.00 per pound. Under the program, any unsold beef will be purchased by the government and
destroyed. Answer the following questions about the impacts of this program.
Price
($/pound)
$4-
3-
0
0.5
a. What is the cost to consumers in lost surplus?
1
b. What is the cost to taxpayers to purchase the unsold beef?
1.5
S
D
Goolsbee et al., Microeconomics, 3e, © 2020
Worth Publishers
When entering your answers, pay close attention to the scale of the quantity axis!
Quantity of
beef (millions
of pounds)
Lost consumer surplus: $
Value of Unsold Beef: $
750000

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