The following graph input tool shows the market for grain products in the United

Question

The following graph input tool shows the market for grain products in the United States. The market equilibrium price this year is $1.25 per bushel. Use the graph input tool to help you answer the questions that follow. You will not be graded on any adjustments made to the graph input tool. If the U.S. government implements a price support of $1.75 per bushel, the result is of bushels. The price support of $1.75 per busel will farm revenue from initially to. In order to make the price support effective, the government has to purchase the surplus output resulting from the above-equilibrium price. Taxpayers, in turn, have to pay higher taxes to finance this policy. From the graph, the amount of tax burden to taxpayers imposed by a $1.75 per bushel price support on grain products is.

Explanation / Answer

If price=1.75,supply is 28 and demand=16,so there is surplus of 28-16=12

Revenue rises from 1.25(20)=25 to 1.75(16)=28

Tax burden=1.75(12)=21

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