Can you please graph the effects of a price floor on consumer and producer surplus in each case:

Part 1: Government Market Interventions

• European farmer's hold large political power and influence policy to get government protection. Consider the effect of a price floor that increases the free-market price on agricultural products under two scenarios: (1) Elastic supply, and (2) inelastic supply. Analyze and draw the effects of a price floor on consumer and producer surplus in each case. In which case is the transfer of surplus to farmers larger? In which case is the deadweight loss larger? Do you think agricultural products have a high or low supply elasticity?

• Now focus on the case of inelastic supply and instead of a price floor, consider the effects of a subsidy. Would farmers prefer a subsidy or a price floor? What about consumers?

Part 2: Measurement

Suppose that in the economy you are studying there are 3 types of goods and you know the following about their sales (including export sales) in 2022 and 2023:

Price 2022 Quantity 2022 Price 2023 Quantity 2023 Ropes $150 5,000 $160 5,500 Bikes $1,000 5,000 $1,150 4,800 Tires $40 10,000 $45 9,600