Suppose that the government decides to guarantee and above-market price for a good by buying up and surplus ar the above-market price. Using a conventional supply- demand diagram, illustrate the following gains and losses from such a price support:
a. The loss of consumer surplus
b. The gain of producer surplus in the short run
c. The cost of running the government program ( assuming no storage costs)
d. What is the total cost of the program to consumers?
e. Are the total cost and benefits of the support program widespread concentrates?