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Glossary
Knowledge Check - Scenario 6

For the following scenario in the milk market, identify the type and cause of change. Note that these scenarios are asking about producer behavior—supply and quantity supplied.


Scenario 6: In an effort to lower the price of milk, the government provides a subsidy to milk producers.

1. Based on Scenario 6, the supply curve for milk

shifts to the right.

shifts to the left.

does not shift.

 
Scenario 6: In an effort to lower the price of milk, the government provides a subsidy to milk producers.
 
2. Based on Scenario 6, which factor caused the change in the supply of milk?

A change in the costs of inputs to the production process

A change in technology

A change in the number of producers in the market

Government policies

Expectations of future prices

A change in the price of other goods produced by a firm

A change in the price of milk