An election is coming up.The government has decided to curry votes from the cotton-growing states,so it has determined that the price of cotton is too low.
a.Suppose the government imposes a binding price floor on the cotton market.Draw a market model,showing the surplus of the market.
b.If the demand for cotton is elastic,why has the revenue in the market for cotton decreased?
c.Suppose the government (via the taxpayers)agrees to buy all the surplus at the price floor.For each market participant,consumers,producers,taxpayers,and government,explain who gains and loses,and why.

Question

Quizplus · Accepted Answer

The Answer of An election is coming up.The government has decided to curry votes from the cotton-growing states,so it has determined that the price of cotton is too low.
a.Suppose the government imposes a binding price floor on the cotton market.Draw a market model,showing the surplus of the market.
b.If the demand for cotton is elastic,why has the revenue in the market for cotton decreased?
c.Suppose the government (via the taxpayers)agrees to buy all the surplus at the price floor.For each market participant,consumers,producers,taxpayers,and government,explain who gains and loses,and why.

An Election Is Coming Up