(a) Assume the EU decides to intervene in the market for wheat. Illustrate this with a diagram. Assume the equilibrium price is €200 per ton. At the price floor of €300 per ton, Qd is 100,000 tons; Qs is 200,000 tons. Illustrate the Qd, Qs and label any shortage/surplus. ($2,000)
(b) What is the monetary cost of this market intervention? ($1,000)
(c) The EU also uses export subsidies to help its famers. What impact does this have on: domestic production within Europe; (ii) farmers in developing countries? ($1,000)