Problem
The U.S. Department of Agriculture guarantees dairy producers that they will receive at least $1.00 per pound of butter they supply to the market. Below is the current monthly demand and supply schedule for wholesale butter (in millions of pounds per month). Wholesale Butter Market Price (dollars per pound) Quantity of Butter Demanded (millions of pounds) Quantity of Butter Supplied (millions of pounds) $0.80 107 63 0.90 104 71 1.00 101 79 1.10 98 87 1.20 95 95 1.30 92 103 1.40 89 111 1.50 86 119 1.60 83 127 1.70 80 135 1.80 77 143 a. In the butter market, the monthly equilibrium quantity is million pounds and the equilibrium price is $ per pound. b. What is the monthly surplus created in the wholesale butter market due to the price support (price floor) program? 22 million pounds 79 million pounds Zero 11 million pounds Suppose that a decrease in the cost of feeding cows shifts the supply schedule to the right by 40 million pounds at every price. c. Fill in the new supply schedule given the change in the cost of feeding cows. Wholesale Butter Market Price (dollars per pound) Quantity of Butter Demanded (millions of pounds) Initial Quantity of Butter Supplied (millions of pounds) New Quantity of Butter Supplied (millions of pounds) $0.80 107 63 0.90 104 71 1.00 101 79 1.10 98 87 1.20 95 95 1.30 92 103 1.40 89 111 1.50 86 119 1.60 83 127 1.70 80 135 1.80 77 143 d. Given the new supply for butter, what is the monthly surplus of butter created by the price support program? 22 million pounds Zero 18 million pounds 29 million pounds.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.