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QUESTION 48 Suppose the equilibrium price for a pallon of milk is $2.50, but due to government price supports, the minimum le
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48. Causes a surplus of milk in the market.

When a price floor ($2.75) is set above the equilibrium price ($2.50), quantity supplied will exceed quantity demanded. This results in excess supply or surplus.

49. A shortage of building materials.

When government laws regulate prices, it is known as price control. This results in excess demand or shortage.

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