Identify the negative consequences of establishing a price floor on milk. Correct Answer (s) Sellers will be tempted to engage in illegal activity to recoup some of their costs due to milk that went unsold. There will be a decrease in the quantity of milk demanded. There will be a surplus of milk. Consumers will demand higher-quality milk as they are forced to pay more.

Question

Andres Petersen

Business

3 June, 05:07

Identify the negative consequences of establishing a price floor on milk. Correct Answer (s) Sellers will be tempted to engage in illegal activity to recoup some of their costs due to milk that went unsold. There will be a decrease in the quantity of milk demanded. There will be a surplus of milk. Consumers will demand higher-quality milk as they are forced to pay more.

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Answers (1)

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Allyson Warner · Answer 1

Answer: Statement A, B, C

Explanation:

1. Floor price is always established above equilibrium price, thus most of the consumers will not be able to purchase milk due to high price, leading to low demand. Hence statement B is a negative impact.

2. As the price will be above equilibrium price, suppliers will overproduce resulting in surplus of milk. Hence, statement C is a negative impact.

3. Due to overproduction suppliers may indulge in illegal activities to cope with unsold units. Hence, statement A is a negative impact.