I finished an assignment and I can't get it right! Can I get some guidance. I will post professor feed back and my work! And orginal assignment

Professor:

Please see attachments. Thanks!

Hi, Elizabeth. E, G, and H are still incorrect. In E, there are not 2 possible answers; consumer and producer surplus are what they are. So, please see PDF example I provide where producer surplus is comprised of a triangle (smaller one) and a rectangle (or 2 smaller ones) after a price floor; $24,500, as noted before, is not correct. In G, please pay attention to the directions which require 3 points of data to determine the answer, and it also depends on a correct answer out of E. Thanks.

Hi, Elizabeth. I am not sure where the $24,500 is coming from in G. It is not correct. You are to use answers in D, E, and F to determine G. G and H are still incorrect.

Hi, Elizabeth. You are using $24,500, which I am unsure of. I think you are including the deadweight losses, which that is not correct. Deadweight losses are losses to consumer and producer surplus, so you should be only looking for the area of surplus for producers AFTER a price floor is imposed. If you view the PDF I provided, it exemplifies how to do this problem precisely, only with different numbers. If you cannot determine still how to arrive at those answers, we can talk early next week. Thanks.

Work:

Question 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? Answer: The shaded area (Blue) is the consumer surplus without price floor. To measure consumer surplus, we will measure the area of the shaded triangle. Consumer Surplus Before price floor = 1/2 * (100-50) * (500) Consumer Surplus Before price floor = 1/2 * 50* 500 Consumer Surplus Before price floor = 12500 Question b: How much producer surplus is created when there is no price floor? Answer: The shaded area (Green) is the Producer's surplus without price floor. To measure the producer's surplus, we will measure the area of the shaded triangle. Producer's SurplusBefore price floor = 1/2 * (50) * (500) Producer's Surplus Before price floor = 12500 Question c. What is the total surplus when there is no price floor? Answer c: Total Surplus = Consumer Surplus + Producer Surplus Total Surplus Before price floor = 12500+12500 Total Surplus Before price floor = 25000 Question 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? 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. 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 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? 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 will measure the area of the shaded (triangle+trapezium). Area = [1/2*50*500] + [(700+500)/2*(70-50)] Area = 12500 + [600*20] Area = 12500+12000 Area = 24500 Question f. The Chairman of Productions 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 productions office spend on buying up gosum berries? Show your calculations. Answer f: Money spent by Chairman of Productions Office to buy surplus = Quantity bought * Price of the berries Money spent by Chairman of Productions Office to buy surplus = (700-300) * 70 Money spent by Chairman of Productions Office to buy surplus = (400) * 70 Money spent by Chairman of Productions Office to buy surplus = $28000 Question g. The Emperor of Gondwanaland must collect taxes from the people to pay for the purchases of surplus gosum berries by the Chairman of Productions Office. As a result, total surplus (producer plus consumer) is reduced by the amount the Chairman of Productions 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. Answer g: If the total surplus is reduced by the amount the Chairman of Productions Office spent on buying surplus gosum berries then we have to add producer surplus and consumer surplus with a price floor, and subtract that from the money spent by the Chairman of Productions Office to buy surplus. Therefore, total surplus with Taxes = (producer surplus with a price floor + consumer surplus with a price floor - money spent by the Chairman of Productions Office to buy surplus) total surplus with Taxes = 24500 + 4500 - 28000 total surplus with Taxes = 1000 Question h. 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? Answer: This new Surplus after taxes (in question g) is way less than the surplus without flooring because most of the surplus is taken away by taxes as the Chairman of Production's Office is covering their expenses by charging taxes. The difference in the total surplus in both the cases (without flooring, and with flooring and taxes) is 24000 units (25000-1000).

Original Assignment:

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.

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 Productions 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	1,000

The accompanying diagram shows supply and demand curves illustrating the market for Gondwanaland gosum berries. Utilizing this information, answer the following questions.

(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 S 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.)

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.

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

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

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.

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.

f. The Chairman of Productions 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 productions office spend on buying up gosum berries? Show your calculations.

g. The Emperor of Gondwanaland must collect taxes from the people to pay for the purchases of surplus gosum berries by the Chairman of Productions Office. As a result, total surplus (producer plus consumer) is reduced by the amount the Chairman of Productions 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.

h. 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?

GONDWANALAND GOSUM BERRY MARKET Supplied Demanded $130 $120 $110 ID SI $100 $90 P $80 R $70 Price Floor 1 $60 E $50 E $40 $30 $20 S $10 D $0 0 100 200 300 400 500 600 700 800 900 1000 1100 1200 QUANTITY