The government of Economica announces that it will purchase its farmers' surplus of milk.From this announcement, you can infer that Economica has a

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Quizplus · Accepted Answer

The fact that the government is purchasing the farmers' surplus of milk indicates that there is a surplus of milk in the market, which would typically lead to a decrease in price. However, by announcing that they will purchase the surplus, the government is effectively setting a price floor above the equilibrium price for milk, ensuring that the farmers will be able to sell their surplus at a higher price than they would have otherwise. This intervention suggests that there is not a free market for milk in Economica.

The Government of Economica Announces That It Will Purchase Its