Suppose That the Equilibrium Price of a Bushel of Corn

question 41

Essay

Suppose that the equilibrium price of a bushel of corn is $0.75 per gallon.The government decides to place a minimum price on corn and will not allow sellers to charge less than $0.90 per bushel.Draw this situation using a graph.Make sure that you show the original equilibrium and the effect of the minimum price on the market.What will happen in this market? What will happen to total surplus?

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Definitions:

SUTA

This stands for State Unemployment Tax Act, which is a payroll tax that employers must pay to the state to fund its unemployment benefits program.

Current Liabilities

Short-term financial obligations that are due within one year or within a normal operating cycle.

Quick Ratio

A liquidity metric that indicates a company's ability to cover its current liabilities without selling inventory, calculated as (cash plus marketable securities plus accounts receivable) divided by current liabilities.

Temporary Investments

Short-term investments that a company plans to convert into cash within a short period, typically one year or less.