19.8 Business and Policy Application: Price Floors for Corn: Is it a Tax or a Subsidy? In exercises 18.9 and 18.10, we investigated policies that imposed a price floor in the corn market.

A. We will now see whether some of the price regulation proposals we considered are equivalent to taxes or subsidies. For simplicity, assume that tastes are quasilinear in corn.

a. In exercise 18.9, we began by considering a price floor without any additional government program. Illustrate the equilibrium impact of such a price floor on the price of corn paid by consumers as well as the price of corn received by producers.