Answer to Question #68553 in Microeconomics for usman

Question

Price per gallon quantity demanded quantity supplied
10 100 500
8 200 400
6 300 300
4 400 200
2 500 100

A. Using the above data, graph the demand for and the supply of milk. Identify the equilibrium point as E, and use dotted lines to connect E to the equilibrium price on the price axis and the equilibrium quantity on the quantity axis.
B. Suppose the government enacts a milk price support of $8 per gallon. Indicate this action on your graph, and explain the effect on the milk market. Why would the government establish such a price support?

Answer 1

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