Exhibit 5-7 Refer to Exhibit 5-7.If the government intervenes in the market for milk and sets a price ceiling of $2.00 per gallon,the result is:

Question

Exhibit 5-7  Refer to Exhibit 5-7.If the government intervenes in the market for milk and sets a price ceiling of $2.00 per gallon,the result is:

Quizplus · Accepted Answer

When the price ceiling is set at $2.00 per gallon, it is below the equilibrium price of $2.50 per gallon. As a result, consumers will demand more milk than suppliers are willing to sell, causing a shortage of milk. Some consumers will not be able to buy milk at the price ceiling because there won't be enough milk available in the market. Sellers, on the other hand, may not be able to sell all their available milk at the price ceiling since they may not find it profitable enough to supply all the milk demanded at that price.