****
$2.00 5,500 b. Complete column Dc+DB total combined Canadian and Brazilian coffee beans demanded of Table 4, by inserting the correct values, computed from information contained in Tables 2 and 3, at each price. Table 4 DB S Dc+DB Brazilian quantity Quantity of Brazilian Total combined Canadian Price of Brazilian of Brazilian coffee beans and Brazilian coffee coffee beans coffee beans supplied beans demanded demanded (per pound) (pounds) (pounds) (pounds) $4.00 6,000 1,000 $3.50 5,000 2,500 $3.00 4,000 4,000 $2.50 3,000 5,000 $2.00 2,000 7,000 Below is the new supply and demand graph (Graph 2.b.) that illustrates the equilibrium price and quantity of Brazilian coffee beans.This competency assessment assesses the following Outcome: BU224M2-2: Examine changes in price and quantity caused when governments take actions to modify market outcomes. In a perfectly competitive market, the equilibrium price and quantity represent the most efficient operation of that market. Optimum efficiency means that sellers cannot be made better off without, at the same time, making buyers worse off, and that buyers cannot be made better off, without making the sellers worse off. This Assignment presents a scenario in which a government tries to improve the financial position of the sellers, in such a perfectly competitive market, by instituting a legal price floor that is significantly above the equilibrium price. A price floor is the lowest price for which a seller can legally sell the product. In this assessment, you will demonstrate your understanding and ability to correctly calculate the consumer surplus, producer surplus, and total surplus both before a price floor is established and after a price floor is enacted. Additionally, you will demonstrate an understanding of the impact on the entire economy, based on any changes in taxes required, if the government is to purchase any extra product that is not sold to consumers. This assessment presents a scenario in which a government tries to improve the financial position of the sellers, in such a perfectly competitive market, by instituting a legal price floor that is significantly above the equilibrium price. A price floor is the lowest price for which a seller can legally sell the product. Directions: Using the Word template provided in the Minimum Submission Requirements, answer the following questions based on the situation. Questions Suppose that the Gondwanaland chairman of production, who sets the governmental price floor for gosum berries, in an effort to assist the gosum berry producers to have a higher income, sets the price floor at $70 per barrel. In that particular year, the amount of gosum berries produced at the $70 price floor was 700 barrels per month. To support the price of gosum berries, the Chairman of Production's Office had to purchase 400 barrels per month. The accompanying chart and diagram shows supply and demand curves illustrating the market for Gondwanaland gosum berries.Price Quantity Supplied Quantity Demanded $120 1,200 $110 1, 100 $100 1,000 0 $90 900 100 $80 800 200 $70 700 300 $60 600 400 $50 500 500 $40 400 600 $30 300 700 $20 200 800 $10 100 900 $0 0 1,000The accompanying diagram shows supply and demand curves illustrating the market for Gondwanaland gosum berries. Utilizing this information, answer the following questions. GONDWANALAND GOSUM BERRY MARKET \"upplied \"Jutland\" moo I too not: (Description: The diagram shows a graph with the Quantity along the horizontal axis and Price along the vertical axis. A blue downward sloping line, labeled \"D" represents the Demand curve for the data in the accompanying chart. A red upward sloping line, labeled \"8\" represents the Supply curve for the data in the accompanying chart. The point where the two lines cross is labeled \"E" and represents the Equilibrium Quantity and Price. A gray dotted line extends downward from the point labeled \"E" to the horizontal axis and points to the quantity of 500. Another gray dotted line extends from the point labeled \"E" and extends to the right to the vertical axis and points at the price of $50. A black line crosses the graph to the horizontal axis at a price of $70 and is labeled \"Price Floor.\" A red dashed line extends from the point where the black line crosses the red Supply curve and extends down to the horizontal axis and points to the quantity 700. A blue dashed line extends from the point where the black line crosses the blue demand curve and extends down to the horizontal axis, pointing to the quantity of 300.) MARKET IN EQUILIBRIUM. CS - PS D Q ( S = B X H X - 5 B= BASE H = HEIGHT 6 x 5 4 . 5 = 15 PS - B X H X . 5 6 X 5 x. 5 - 15 PRICE FLOOR es DEAD WEIGHT LOSSES S # # 2 3 -Q (s after Pricefloor = 3x 2 x . 5 = 3 15 after Price Flore : 3 x 3 = 9 ( SQUARE # 1 ) 2 x 3 - 6 ( SQUARE # 2 ) 3 x 3 x - 5 = 4.5 ( TRIANGLE ) 79.5Please see attachments. Thanks! Hi, Devonshe. You are showing $24,500 in e, which is not correct. 50, e, g, and h are not correct still. ln e., you should be getting a smaller triangle where the area is Base X Height X .5, and then also a rectangle (or 2 smaller ones). Please the PDF ("pricefloor") that I provided you where l exemplify that. Thanks. G and H are still not correct. Please re-read the instructions in g on where to retrieve the data, and h depends on g. Please re-read the instructions in G again, Devonshe. You should be using data from d, e, and f, right? Hi, Devonshe. Your previous submission had part e correct, but now you changed it. Please advise why. You only had G and H incorrect in the last submissions, and in G, you were missing a data quantity, which is why I advised you to go and re-read the instructions where you are to take answers from d, e, and fto calculate G and H. E, G, and H are now currently incorrect. Hi, Devonshe. G and H are not correct. Again, please re-read the instructions. It says to "use your answers from d, e, and f"; you are not, as you are only using your answers from d and e. Please see the exam directions from the assignment for G below: The Emperor of Gondwanaland must collect taxes from the people to pay for the purchases of surplus gosum berries by the Chairman of Production's Office. As a result, total surplus (producer plus consumer) is reduced by the amount the Chairman of Production's Office spent on buying surplus gosum berries. Using your answers for problems d, e, and fabove, what is the total surplus when there is a price floor? Answer d: The shaded area (Blue) is the consumer surplus with price floor. To measure consumer surplus, we will measure the area of the shaded triangle. Area of triangle: 1/2*base'*height Consumer Surplus after price floor = 1/2 * (100-70) * (300) Consumer Surplus after price floor = 4500 Question e. After the price floor is instituted, the Chairman of Productions Office buys up any barrels of ggsgmberries that the producers are not able to sell. With the price floor, the producers sell 300 barrels per month to consumers, but the producers. at this high price floor, produce 700 barrels per month. How much producer surplus is created with the price floor? Answer e: The shaded area (Green) is the Producer's surplus with the price floor and all the surplus is bought by the Chairman of Productions office. To measure the producer's surplus, we find the area of region. Area of triangle FEG = 112 * Base * Height = 112 * (QE gm) * FG =1l2 * (500 300) * (70 30) = 112 * 200 * 40 = 4000 Question f. The Chairman of Production's Office buys any barrels of 99554111 berries that the producers are not able to sell. With the price floor, the producers sell 300 barrels per month to consumers; but the producers, at this high price floor, produce 700 barrels per month. How much money does the chairman of production's office spend on buying up mm berries? Show your calculations. Answer f: Money spent by Chairman of Production's Office to buy surplus = Quantity bought * Price of the berries Money spent by Chairman of Production's Office to buy surplus = (700-300) * 70 Money spent by Chairman of Production's Office to buy surplus = (400) * 70 Money spent by Chairman of Production's Office to buy surplus = $28000 Question g. The Emperor of Gondwanaland must collect taxes from the people to pay for the purchases of surplus gm berries by the Chairman of Production's Office. As a result, total surplus (producer plus consumer) is reduced by the amount the Chairman of Production's Office spent on buying surplus gypsum berries. Using your answers for problems d, e, and f above, what is the total surplus when there is a price floor? Show your calculations. Answer 9: If the total surplus is reduced by the amount the Chairman of Production's Office spent on buying surplus gypsum berries then we have to add producer surplus and consumer surplus with a price M subtract that from the money spent by the Chairman of Production's Office to buy surplus. Total Surplus = Area of Triangle ACF + Area of region COFG = 4500 + 16500 = 21000
