Question
a) To alleviate the negative impact of COVID -19 on Chinese farmers,the government has set the price of rice at $ 300 per tonne, which
a) To alleviate the negative impact of COVID -19 on Chinese farmers,the government has set the price of rice at $ 300 per tonne, which is the above marlet equilibrium price of $250 tonne. Use a demand and supply diagrams to show and explain the impact of the government policy om equilibrium quantity and price of rice .
B)
With the diagram in part (a) explain the change in consumer surplus, producer surplus and the deadweight loss in the domestic rice market .Assume that the China does not trade rice internationally .
C) suppose that after six month change in policy from price regulations to a subsidy payment of rice producers. Analysis the impact of new policy on the equilibrium price and the quantity of rice.
D) Compare and contrast the impact of the new policy on the efficiency of the rice market relative the impact of the price regulations policy. What policy is better the price regulations or the subsidy
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