When the Support Price for Milk and Dairy Products Is

question 101

Multiple Choice

When the support price for milk and dairy products is higher than the market equilibrium price,_____

• A)a typical consumer-taxpayer pays an artificially high price for milk and, as a taxpayer, also pays for the surplus milk.
• B)the prices of specialized resources, such as cows and pasture land, decrease.
• C)the producer surplus enjoyed by dairy farmers decreases.
• D)farmers decrease their quantity supplied in response to the higher price.
• E)farmers end up earning a negative rate of return on their investment in the long run.

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Definitions:

Multiple Suppliers

A sourcing strategy where a company uses various suppliers to mitigate risks and ensure a steady supply of products or components.

Bullwhip Effect

The increasing fluctuation in orders that often occurs as orders move through the supply chain.

Orders Decrease

A situation where the number of orders for products or services is reducing, potentially impacting company revenue and production planning.

Unique-Event

A singular occurrence that is distinct in nature, not expected to repeat under normal circumstances.