00:03
The u .s.
00:05
Government uses price supports to help farmers, and sometimes they're in the form of a price floor.
00:14
Other times the government might use target prices, and that means the government gives the farmers the difference between the market price and the target price for each unit sold.
00:28
We've got a graph here for the demand and supply of corn, and we want to know what would happen if we had a price floor at $5 a bushel.
00:40
At $5 a bushel, farmers, my quantity supplied would be 1 ,200 bushels.
00:49
The consumers would buy 800, and the government would buy the other 400.
00:55
The government would pay $400 bushels times $5 ,000.
01:13
And the revenue for the farmers would be $1 ,200 bushels times $5 a bushel would be $6 ,000...