Gondwanaland gosum berries. Utilizing this information, answer the following questions.

a)In the absence of a price floor, the maximum price that a few of the consumers are willing to pay is up to $100 per barrel of gosum berries. The market equilibrium (E) price is $50 per barrel. How much consumer surplus is created when there is no price floor? Show your calculations.

Height = $100- $50

= $50

Base = $500-$0

= $500

Consumer Surplus= ($50*$500)/2

= $25,000/2

= $12,500

b)How much producer surplus when there is no price floor? Show your calculations.

Height = $50 - $0

=$500

Base = $500 - $0

=$500

Producer Surplus = ($50 * $500)/2

=25,000/2

=$12,500

c)What is the total surplus when there is no price floor? Show your calculations.

= $12,500 + $12,500 - $0

= $25,000

d)After the price floor is instituted, the legal minimum price that can be charged by suppliers is $70 per barrel. The maximum price that a few of the consumers are still willing to pay is $100 per barrel of gosum berries. With the price floor at $70 per barrel, consumers buy 300 barrels of gosum berries per month. How much consumer surplus is created with the price floor? Show your calculations.

Height = $100 - $70

=30

Base = $300 - $0

=300

Consumer Surplus = ($30 * $300)/2

= $9,000/2

= $4,500

e)After the price floor is instituted, the Chairman of Productions Office buys up any barrels of gosum 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 producer surplus is created with the price floor? Show your calculations.

Height = $70 - $0

= $70

Base = $700 - $0

= $700

Producer Surplus = ($70 * $700)/2

=$49,000/2

=$24,500

Not correct.The price floor now transfers some of the consumer surplus to the producer/seller, and thus the producer surplus is larger.However, deadweight losses ensue as well, taking some surplus from both.Consumer surplus and producer surplus will be determined by finding the area of the triangle, where base X height X .5.

a)The Chairman of Production's Office buys any barrels of gosum 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 gosum berries? Show your calculations.

# unsold = 700 - 300

= 400

Cost = $70 * 400

= $28,000

b)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 f above, what is the total surplus when there is a price floor? Show your calculations.

= $4,500 + $24,500 - $28,000

= $1,000

Your answer in e is causing this to be incorrect.

c)How does this compare to the total surplus without a price floor from question c above? Is it more, or less, and by how much?

You will take the total from c and minus it from that of g, but it is contingent upon your answer in e being correct as well.

There is a difference of $24,000 without a price floor. This is very significant. When the goods are sold at equilibrium the surplus would decrease. With a price floor in place the surplus total will be greater than if the equilibrium price was implemented.