What will be the cost to the government of this policy

Assignment Help Engineering Mathematics

Reference no: EM131530326

Question: The accompanying table shows hypothetical demand and supply schedules for milk per year. The U.S. government decides that the incomes of dairy farmers should be maintained at a level that allows the traditional family dairy farm to survive. So it implements a price floor of $1 per pint by buying surplus milk until the market price is $1 per pint.

a. How much surplus milk will be produced as a result of this policy?

b. What will be the cost to the government of this policy?

c. Since milk is an important source of protein and calcium, the government decides to provide the surplus milk it purchases to elementary schools at a price of only $0.60 per pint. Assume that schools will buy any amount of milk available at this low price. But parents now reduce their purchases of milk at any price by 50 million pints per year because they know their children are getting milk at school. How much will the dairy program now cost the government?

d. Explain how inefficiencies in the form of inefficient allocation to sellers and wasted resources arise from this policy.

Reference no: EM131530326

Questions Cloud

Estimated reduction in collection and processing time : The estimated reduction in collection and processing time is one day. Treasury bills are currently yielding 5 percent per year and there are 365 days per year.

What do you mean by capital budgeting : What do you mean by capital budgeting?

Examine web accessibility for a couple web sites : Examine Web accessibility for a couple Web sites. This is a freely available tool that you can learn about by reviewing the tutorial found here.

Which chromatographic method would be best to in this case : Because of a budget cut in the crime lab rose thomas must use an analytical technique that will be relatively cheap and allows many samples at one time.

What will be the cost to the government of this policy : The accompanying table shows hypothetical demand and supply schedules for milk per year. The U.S. government decides that the incomes of dairy farmers.

The biggest mysteries in science today : In a 2-3 paragraph essay, identify one piece of evidence for the existence of either dark matter or dark energy, and describe it in detail.

Determination of the appropriate crime prevention strategy : Crime Prevention - A determination of the appropriate crime prevention strategy for the jurisdiction based on this analysis

Specific characteristics of the bond : Unlike equities, bond valuation is more complicated by the specific characteristics of the bond itself as outlined in the bond indenture,

What is the value of this investment : What is the value of this investment?

User Account

All Pages