BU224 Unit 6 Assignment Template 0714
———————————- General Instructions for all Assignments———————————–
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Course number_section number_LAST_FIRST_ unit number
- At the top of the template, insert the appropriate information: Your Name, Course Number, Section Number and Date
- Insert your answers below, or in the appropriate space provided for in the question. Your answers should follow the APA format with citations to your sources and, at the bottom of your last page, a list of references. Your answers should also be in Standard English with correct spelling, punctuation, grammar, and style (double spaced, in Times New Roman, 12-point, black font). Respond to questions in a thorough manner, providing specific examples of concepts, topics, definitions, and other elements asked for in the questions.
- Provide a list of references at the end of the last page of your assignment.
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——————————————- Career Competencies —————————————–
In this assignment, you will engage in developing the following career competencies:
Analyzing Quantitative Data
Analyzing Qualitative Data
——————————————- Assignment ——————————————-
Suppose that the U.S. Department of Agriculture (USDA) administers the price floor for cheese, set at $0.17 per pound of cheese. (In real life the actual price floor was officially set at $16.10 per hundredweight of cheese. One hundredweight is 100 pounds.) At that price, according to data from the USDA, the quantity of cheese produced in 2009 by U.S. producers was 212.5 billion pounds, and the quantity demanded was 211 billion pounds. To support the price of cheese at the price floor, the USDA had to buy up 1.5 billion pounds of cheese. The accompanying diagram shows supply and demand curves illustrating the market for cheese.
- In the absence of a price floor, the maximum price that a few of the consumers are willing to pay is $0.20 for a pound of cheese whereas the market equilibrium price is $0.13 per pound. The graph also shows that the minimum price at which a few of the producers are willing to sell is $0.06 per pound. In the absence of a price floor, how much consumer surplus is created?
- How much producer surplus?
- What is the total surplus?
- The maximum price that a few of the consumers are willing to pay is $0.20 per pound of cheese, and the price floor is set at $0.17 per pound. With the price floor at $0.17 per pound of cheese, consumers buy 211 billion pounds of cheese. How much consumer surplus is created now?
- The minimum price at which a few of the producers are willing to sell a pound of cheese is $0.06, and the price floor is set at $0.17 per pound. With the price floor at $0.17 per pound of cheese, producers sell 212.5 billion pounds of cheese (some to consumers and some to the USDA). How much producer surplus is created now?
- The surplus cheese USDA buys is the difference between the quantity of cheese producers sell (212.5 billions of pounds of cheese) and the quantity of cheese consumers are willing to buy at the price floor (211 billions of pounds of cheese). How much money does the USDA spend on buying up surplus cheese?
- Taxes must be collected to pay for the purchases of surplus cheese by the USDA. As a result, total surplus (producer plus consumer) is reduced by the amount the USDA spent on buying surplus cheese. Using your answers for parts d, e, and f, what is the total surplus when there is a price floor?
- How does this compare to the total surplus without a price floor from part c?
|Unit _6_ PERFORM Assignment Grading Rubric|
|Content||Percent Possible||Points Possible|
|correct coversheet information at the top of 1st page||5%||4|
|APA format for answers||3%||2|
|standard English no errors||4%||3|
|At least ONE, or more, references||5%||4|
|Answers: provides complete information demonstrating analysis and critical thinking:||80%||64|
|a. – Calculate total consumer surplus with no price floor?||10%||8|
|b. – Calculate total producer surplus with no price floor?||10%||8|
|c. – Calculate total surplus with no price floors?||10%||8|
|d. – Calculate total consumer surplus with a 17 c/cwt price floor?||10%||8|
|e. – Calculate total producer surplus with a 17 c/cwt price floor?||10%||8|
|f. – How much must USDA pay to purchase the surplus cheese?||10%||8|
|g. – Calculate total surplus with a 17 c/cwt price floor?||10%||8|
|h. – How does the total surplus with a 17 c/cwt price floor differ from no price floor?||10%||8|