The above figure shows supply and demand curves for milk. In an effort to help farmers, the government passes a law that establishes a $3 per gallon price support. To maintain the price support, government must purchase

The negative effects of trade diversion are reduced when:

a. trade diversion is more than offset by trade creation. b. consumers in the importing nation have a change in their buying habits. c. there is a cost increase in nations outside the region. d. the free-trade agreement includes more members.

If a new seller enters a market to compete with an existing natural monopoly, it will:

A) decrease the costs for both the sellers. B) increase the costs of production for both the sellers. C) increase the production costs for the existing seller, and a decrease in the costs for the new entrant. D) decrease the production costs for the existing seller, and an increase in the costs for the new entrant.