A government sets a price floor on corn that is above the equilibrium price, resulting in a surplus of corn. If this price floor remains in place, how will the deadweight loss in the market be affected in terms of consumer and producer surplus?

When a government sets a price floor on corn that is higher than the equilibrium price, it means that corn cannot be sold for less than this set price. This leads to a surplus of corn because farmers are encouraged to produce more, but consumers are not willing to buy as much at the higher price. As a result, some corn goes unsold, which creates a deadweight loss, meaning there is a loss of economic efficiency in the market. In this situation, consumer surplus decreases because consumers have to pay more and buy less, while producer surplus can initially increase since farmers receive a higher price, but they may also face wasted resources. Over time, if the surplus continues, both consumer and producer surplus will be affected negatively, leading to a larger deadweight loss as the market fails to reach an efficient balance.