The market for milk is initially in equilibrium.Milk producers successfully advertise to encourage milk drinking.At the same time,more milk producers enter the market.Standard demand and supply analysis tells us that the:

Question

Quizplus · Accepted Answer

When more milk producers enter the market, the supply of milk increases, which will cause the equilibrium quantity of milk to rise. However, the effect on the equilibrium price cannot be determined without more information. It will depend on the extent to which the increase in supply shifts the demand curve. If demand increases proportionally, the equilibrium price will remain the same. If demand increases more slowly than supply, the equilibrium price will fall. If demand increases more quickly than supply, the equilibrium price will rise. Therefore, choice C is the most appropriate answer.

The Market for Milk Is Initially in Equilibrium