Understanding Price Floors In agriculture, price floors are known as price supports. The government sets a target price for each crop, and if the market price is below that target, it will pay farmers the difference. Suppose that you are a farmer with 400 acres planted in corn. The following graph shows the supply and demand for your crop. 4.50 Target price 3.75 S 3.00 Price per bushel (in dollars) 2.25 1.50 0.75 D 0 10 20 30 40 50 60 Bushels of corn (in thousands) Calculate the Effect of the Price Support How many bushels of corn will you sell at the equilibrium price? How much revenue ( PxQ) will you make? How many bushels do you want to sell at the target price? How many bushels are consumers willing to buy at that price? What is the difference? How much will the government have to pay you for that surplus