about the economics surplus

Question

suppose the government consists in paying farmers the different between the target price P1 and the resulting market price P2, what is the cost to the government of implementing the policy?

P1 is above the equilibrium price and P2 is below the equilibrium and the original

price is at P1 so there is an excess supply.

can u please attach a graph?

the next part is to show the economic surplus on the graph

many thanks!!!!!!

Answer 1

Favorite Answer

Is that right?

http://img42.imageshack.us/img42/2825/supply.png

I hope this can help you

Source(s): windows小畫家