Answered: As the time frame shifts from the short…

Microeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter3: Demand, Supply, And The Market Process

Section: Chapter Questions

Problem 1CQ

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As the time frame shifts from the short run to the long run, what happens in the market for milk with a binding price floor when the surplus is bought up by government? A) Dairy farmers are increasingly willing ot substitute toward producing more milk, and the supply curve for milk becomes more elastic B) Dairy farmers are increasingly willing to substitute away from producing milk, and the supply curve of milk becomes less elastic C) There are no changes, and the elasticity of supply for milk remains unchanged. D) dairy farmers are less willing to substitute away from producing the good, and the supply curve becomes more elastic E) the predicted losses for dairy farmers will eventually cause many farmers to go out of business and the supply curve shifts to the left and become less elastic

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