Math Snap
PROBLEM
Calculate the surplus in the corn market with a price floor of $2.50, given the supply and demand data.
STEP 1
Assumptions1. The price floor is set at $.50 an ear.
. The table provided gives the quantity supplied and quantity demanded at various price points.
3. A price floor means the price cannot go below a certain level, and in this case, it is $.50.
4. The surplus is calculated as the difference between the quantity supplied and the quantity demanded at the price floor.
STEP 2
First, we need to find the quantity supplied and the quantity demanded at the price floor. According to the table, at a price of $2.50, the quantity supplied is2,400 and the quantity demanded is475.
STEP 3
Next, we calculate the surplus caused by the price floor. The surplus is the difference between the quantity supplied and the quantity demanded when the price is at the price floor.
STEP 4
Now, plug in the given values for the quantity supplied and the quantity demanded to calculate the surplus.
SOLUTION
Calculate the surplus.
The surplus caused by the price floor is1,925 ears of corn.