Microeconomics

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The invention of a machine that increases milk production is discovered. If farmers were to decry the effect of this new technology on the price of milk and lobby government to set the price of milk at the price before the invention, what would be the result?

  • Microeconomics -

    Take a shot, what do you think. Hint: Draw initial supply and demand graphs. Then, shift the supply curve because of the invention and put a price ceiling. What happens?

  • Microeconomics -

    excess milk supply

  • Microeconomics -

    excess demand

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