1) Assume that farmers can plant either corn or soybeans in their fields (corn and soybeans substitutes in production).Discuss what happens to equilibrium price and quantity ofsoybeansin each scenario below.

a)A decrease in the price of corn.

b)An increase in the price of soybean seeds.

c)An increase in the demand for corn.

d)A decrease in the demand for soybeans.

Use the graph below to answer the next question.

2a) Based on the graph above, if there is no price floor, what is the level of consumer surplus?Explain.

2b) Based on the graph above, if there is a price floor, by how much does consumer surplus decrease and what area represents the size of the deadweight loss?Explain.

2c) Based on the graph above, if there is a price floor, what area represents the consumer surplus that is shifted to producers?Explain.

P S Price Floor 2 Pa 2 D