Government is concerned about effect of rising milk prices

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Reference no: EM131005401

The government is concerned about the effect of rising milk prices on America's poorest households and has decided that something must be done to make milk more affordable.

a) Use a graph to explain what would happen if the government put a price ceiling in place to lower the price of milk. Who would benefit from this policy? Who would be hurt?

b) Use a second graph to explain what would happen if the government decided to exempt milk from the sales tax that consumers must pay on all purchases. Who would benefit from this policy? Who would be hurt?

Reference no: EM131005401

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