As a result of legislation to establish a floor price for milk, most dairy farmers will
A)end up earning a normal rate of return in the long run
B)end up earning a zero rate of return in the long run
C)end up earning a negative rate of return in the long run
D)benefit from the increased cost of specialized resources used in dairy farming
E)suffer if they own specialized resources at the time the legislation is passed

Question

Quizplus · Accepted Answer

In the long run, the market adjusts to the floor price, and dairy farmers will earn a normal rate of return as supply and demand reach a new equilibrium.

As a Result of Legislation to Establish a Floor Price