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Suppose the equilibrium price for wheat is $4/bushel, but then the government sets a price floor of $5/bushel in an attempt to help out farmers.

Suppose the equilibrium price for wheat is $4/bushel, but then the government sets a price floor of $5/bushel in an attempt to help out farmers. Not only does the government provide a price floor, it also purchases any excess wheat production that cannot be sold at $5 bushel to consumers in the market.

What area, on a welfare analysis graph with the new price floor, represents the consumer and producer surplus? How did the consumer and producer surplus change from the original $4 bushel equilibrium to the newly implemented 5$ price floors(did it go up or down)? How did the price floor change total market benefits(go up or down)? Do these results refute the idea that economic efficiency is maximized at the unregulated market equilibrium, and that government intervention(such as a with a price floor) always creates a deadweight loss?

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