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When the Support Price for Milk and Dairy Products Is

Question 90

Multiple Choice

When the support price for milk and dairy products is higher than the market equilibrium price,_____


A) a typical consumer-taxpayer pays an artificially high price for milk and, as a taxpayer, also pays for the surplus milk.
B) the prices of specialized resources, such as cows and pasture land, decrease.
C) the producer surplus enjoyed by dairy farmers decreases.
D) farmers decrease their quantity supplied in response to the higher price.
E) farmers end up earning a negative rate of return on their investment in the long run.

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