The market demand function is
QS = 18 – 2P
The market supply function is
QD= 5P – 1.5
both measured in billions of bushels per year. The initial equilibrium price is $2.79, and the initial equilibrium quantity is 12 billion bushels. Consumer surplus is $38.62, producer surplus is $15.45, and aggregate surplus is $54.06. Suppose the government wants to raise the price of corn to $3.50. What are the welfare effects of a price floor, price support, production quota, and voluntary production reduction program?
A price floor
A.Consumer surplus
B. Producer surplus
C. Cost to the government
D. Aggregate surplus
E. Deadweight loss billion
