mini project

The government in Canada has instituted many regulations to support their farmers including

quotas and price floors. Assuming the price floor is above the equilibrium price, the benefit is that the

farmers are going to receive a higher price than the unregulated equilibrium market price for their

goods. This artificially high price will allow the farmers to not worry about losing money or making too

small of a profit with their products. Additionally, the government doesn’t have to subsidize the farmers

to keep them afloat. One of the disadvantages is that the price is more expensive for the consumers

and results in a decrease in consumer surplus. There is also going to be a deadweight loss because of

the lack of demand at that price, which creates an inefficient market. The price floor allows producers

with too high of production costs to normally compete in an unregulated equilibrium to enter the

market. These sellers can steal away the sales from the lower cost producers and effectively prevent

efficient trade. This can cause a loss from the original producer surplus which can potentially be bigger

than the deadweight loss.