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.

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.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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