The market price of milk without government intervention is $ per gallon. Consider legislation that doesn't allow the price of milk to be below $4 per gallon and stipulates that the government buy any surplus milk produced at that price. In order to raise the price to $4 per gallon, the government would need to buy million gallons of milk, which would cost the government $ million. Suppose there are only a few dairy farmers who would benefit from this legislation and millions of consumers who would suffer through higher prices. In this case, legislation imposing price supports at $4 per gallon would mean which of the following? O The legislation may or may not pass since the benefits and costs of the legislation are concentrated among similarly sized groups. The legislation should pass because it is economically efficient, but it probably won't because consumers don't understand enough about economics. The legislation will probably pass because its benefits are concentrated while its costs are widespread. The legislation will be easily defeated because the increased price of milk would hurt millions of consumers, who would not reelect their representatives.

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The market price of milk without government intervention is $
Consider legislation that doesn't allow the price of milk to be below $4 per gallon and stipulates that the government buy any surplus milk produced at
that price. In order to raise the price to $4 per gallon, the government would need to buy
million gallons of milk, which would cost the
government $
million.
per gallon.
Suppose there are only a few dairy farmers who would benefit from this legislation and millions of consumers who would suffer through higher prices.
In this case, legislation imposing price supports at $4 per gallon would mean which of the following?
O
The legislation may or may not pass since the benefits and costs of the legislation are concentrated among similarly sized groups.
The legislation should pass because it is economically efficient, but it probably won't because consumers don't understand enough about
economics.
The legislation will probably pass because its benefits are concentrated while its costs are widespread.
The legislation will be easily defeated because the increased price of milk would hurt millions of consumers, who would not reelect their
representatives.
Transcribed Image Text:The market price of milk without government intervention is $ Consider legislation that doesn't allow the price of milk to be below $4 per gallon and stipulates that the government buy any surplus milk produced at that price. In order to raise the price to $4 per gallon, the government would need to buy million gallons of milk, which would cost the government $ million. per gallon. Suppose there are only a few dairy farmers who would benefit from this legislation and millions of consumers who would suffer through higher prices. In this case, legislation imposing price supports at $4 per gallon would mean which of the following? O The legislation may or may not pass since the benefits and costs of the legislation are concentrated among similarly sized groups. The legislation should pass because it is economically efficient, but it probably won't because consumers don't understand enough about economics. The legislation will probably pass because its benefits are concentrated while its costs are widespread. The legislation will be easily defeated because the increased price of milk would hurt millions of consumers, who would not reelect their representatives.
The following graph shows the market for milk.
Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph.
Note: Once you enter a value in a white field, the graph and any corresponding amounts in the grey field will change accordingly.
PRICE (Dollars per gallon)
6
5
A
@
1
0
0
Supply
10
Demand
20
30
40
QUANTITY (Millions of gallons)
50
60
Graph Input Tool
Price
(Dollars per gallon)
Quantity
demanded
(Millions of gallons)
Surplus
(Millions of gallons)
1
50
0
Quantity supplied
(Millions of gallons)
Shortage
(Millions of gallons)
?
10
40
Transcribed Image Text:The following graph shows the market for milk. Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in the grey field will change accordingly. PRICE (Dollars per gallon) 6 5 A @ 1 0 0 Supply 10 Demand 20 30 40 QUANTITY (Millions of gallons) 50 60 Graph Input Tool Price (Dollars per gallon) Quantity demanded (Millions of gallons) Surplus (Millions of gallons) 1 50 0 Quantity supplied (Millions of gallons) Shortage (Millions of gallons) ? 10 40
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