Short answer

Q-4. Following table shows the total demand for corn and the total supply of corn per month in a Saskatoon grain market: Demonstrate your answer graphically. (a) Suppose the government establishes a price ceiling of $3.00 for corn. What will be the main effects of this price ceiling? (b) Suppose the government establishes a price floor of $5.50 for corn. What will be the main effects of this price floor? Thousands Price per Thousands of $ 7.00 of Bushels Bushel Bushels Demanded Supplied $2.50 6.00 5.00 285 280 275 260 265 270 275 280 3.00 4.00 4.50 5.50 6.50 Price per bushel 4.00 270 265 3.00 260 285 2.00 0 260 285 265 270 275 280 Quantity (thousands) of bushels