Sppose that the government wishes to decrease the market

Question

Problem B

Suppose that the demand and supply schedules for corn per ton per month are as given in the table below.

Supply and Demand
Months	Price	Demand	Supply
January	120	800	1300
February	110	900	1200
March	100	1000	1000
April	90	1100	800
May	80	1200	600

1. What is the market equilibrium corn price per month and the market equilibrium number of corn demanded and supplied? Use Excel to graph this out.
2. If the local government can enforce a price-control law that sets the maximum price of $90.00, will there be a surplus or a shortage? How many tons? And how many tons will actually be sold?
3. Suppose that a new government is elected that wants to keep out the poor. It declares that the minimum price that can be charged is $110.00. If the government can enforce that price floor, will there be a surplus or a shortage? Of how many tons? And how many tons will actually be sold?
4. Suppose that the government wishes to decrease the market equilibrium price by increasing the supply of corn. Assuming that demand remains unchanged, by how many tons of corn would the government have to increase the supply of corn in order to get the market equilibrium rental price to fall to $90.00?