Question

U.S government price supports for milk led to an unceasing surplus of milk. In an effort to reduce the surplus about a decade ago, Congress offered to pay dairy farmers to slaughter cows. Use two diagrams, one for the milk market and one for the meat market, to illustrate how this policy should have affected the price of meat. (Assume that meat is sold in an unregulated market).

Answer 1

Answer on Question #47387, Economics, Microeconomics

The numbers used in the chart are just indicative. They are only used to give an idea.

As both milk and meat are produced by cows, the dairy to farmers for slaughtering cows will increase the supply of meat, that's why the surplus of meat will also appear, after which the price for meat will decrease.

http://www.AssignmentExpert.com/