beginning from the point reached in your answer to part b, suppose a fad for bean sprout salad cuts the demand for lettuce, so that people are now willing to only buy half the lettuce, at any given price, that they would have bought before. What will happen to the equilibrium price and quantity of lettuce? Draw in new supply and/or demand curve(s), as needed, to illustrate the new situation, labing the new curve(s) and the equilibrium with the subscript 3.
4) As the sprout fad cuts lettuce farmers' income, the send a delegation to Washington asking for a bail-out. Congress responds by imposing a $24 per crate minimum price for lettuce, agreeing to buy all surplus lettuce that the farmers' can't sell for $24 a crate, using it make salads for the armed forces. How much lettuce will the government have to buy to stabalize the price at $24 per crate? How much will the government have to spend on lettuce? How much more lettuce will be produced than if the price floor had not been imposed?
2 answers