minimum price/price floor- full market impact

Question 1

minimum price and price flooring and why

Answer 1

-fixed price enacted by the government usually set above the market equilbirum
-this is to:prevent price volatility and solve market failure

Question 2

effect of minimum pricing/price flooring on graph

Answer 2

-straight line where the min price is
-the price will rise
-the qd will fall
-the qs will rise
-excess supply is: qs-qd
-cost of intervention buying:box in the middle
-producer rev: with ib-big box, without ib: small box
-dwl: market equilbirum, down to qd up to min price