1. Agricultural Price Floors

Describe a real-world government policy that creates a market surplus. Be sure to carefully define the relevant market and the stakeholders that are involved in the market. Explain the efficiency implications of the policy you have picked. Make sure to relate your answer to the producer, consumer, and total surplus in the market. In the instance you have described, what is the government’s motivation for intervening in the market in this way? Will a deadweight loss exist in your example, please explain your analysis?

2. One of the major problems in applying the Coarse Theorem in practice is the existence of high transaction costs. Propose an approach that a third party could use that would reduce these costs sufficiently so that bargaining could proceed. How likely is the solution to be efficient, and why? Do you think government intervention in the market will allow for markets to allocate resources, efficiently or not?

3. Suppose you are using a risk-benefit analysis to evaluate a policy aimed at limiting the use of a pesticide applied to a specific crop of your choice. Describe the risks and benefits that would have to be estimated to conduct this analysis properly. Please make sure to research your specific crop, in your risk-benefit analysis. In your answer, make sure to fully describe each of the stakeholders that are involved in this market and the implications of the pesticide.