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The Canadian Dairy Commission ( CDC ) administers the price floor for butter, which was set at $ 8 per kilogram in 2 0 1
The Canadian Dairy Commission CDC administers the price floor for butter, which was set at $ per kilogram in Use the following additional information to answer the following questions: Without the price floor, the equilibrium price of butter is $ per kilogram, and the equilibrium quantity is million kilograms of butter. The supply curve intersects the price axis at $ and the demand curve intersects the price axis at $ At that price, according to data from the CDC the quantity of butter supplied in was million kilograms, and the quantity demanded was million kilograms To support the price of butter at the price floor, the CDC therefore had to buy up million kilograms of butter. Suppose the federal government covers the cost of surplus butter using tax revenue, as they do in the United States. As a result, total surplus producer plus consumer is reduced by the amount the CDC spent on buying surplus butter. What is the total surplus when there is a price floor? Do not round your answer. How does this total surplus compare to the total surplus without a price floor from part a a The total surplus with the price floor is less than the total surplus without the price floor. b The total surplus with the price floor is equal to the total surplus without the price floor. c The total surplus with the price floor is greater than the total surplus without the price floor.
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