In order to protect dairy farmers from bankruptcy, the government creates a price floor making it illegal to sell milk below a profitable price. What will be the economic effects of this price floor?
The dairy farmers will survive and there will be no adverse effects.
The dairy farmers will go out of business despite the government's attempt to save them.
The dairy farmers will survive, but milk will cost more.
The dairy farmers will go out of business as the entire economy collapses into a recession.

Question

In order to protect dairy farmers from bankruptcy, the government creates a price floor making it illegal to sell milk below a profitable price. What will be the economic effects of this price floor?
The dairy farmers will survive and there will be no adverse effects.
The dairy farmers will go out of business despite the government's attempt to save them.
The dairy farmers will survive, but milk will cost more.
The dairy farmers will go out of business as the entire economy collapses into a recession.

anonymous · Answer

The dairy farmers will survive, but milk will cost more.

anonymous · Answer

mhmm