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price of soybeans in august 2019 was $8.22 , july 2020 it was $8.50 , and...

price of soybeans in august 2019 was $8.22 , july 2020 it was $8.50 , and august 2020 it was $8.66. if the government placed a price ceiling or a price floor on this product, what would happen in the market? explain. (specify the price and state whether it is a price ceiling or a price floor in uour case).

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Expert Solution

A price floor should be placed to prevent adverse soyabean prices which is much below average . So a price ceiling should be set at average price say $9 . Price will not be allowed to fall below $9 . This causes surplus in the market , quantity supplied of soyabean becomes larger than quantity demanded at $9 price floor .

Rahul Sunny answered 2 years ago
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