Suppose the USDA (US Dept of Agriculture) establishes a price floor for corn @ $2.00/bu (not far from reality in 2004). The US is the largest producer of corn at about 13 billion bu/yr. This price floor has been in existence for 50 years, The current price (this is the global equilibrium price) for corn on the Chicago Board of Trade on June 1 is $6.90/ bu. How large, would you guess, in billions of bushels, is the the surplus (using the concept in the text) in US corn production?
Picadilly and Frish, said that each of their incomes had risen during the pandemic, due to investment in Bitcoin, So, last week,they each bought a new Ford Focus. So due to this single isolated event, Ford sales of new Focus’ increased by two. If this is depicted by a supply and demand curve, Is this an increase in demand, or an increase in the quantity demanded?
What is the concept of “the invisible hand”? How does this concept address efficiency?
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