Excess Supply from a Minimum Milk Price. In the equilibrium in the powdered milk market, the quantity is 100 million units and the price is $9.00 per unit. The price elasticity of demand is 0.80 and the price elasticity of supply is 2.50. Suppose the government imposes a minimum price of $9.90.
a. Draw a graph to show the market effects of the minimum price.
b. At the minimum price, the quantity of powdered milk supplied is____ million units, the quantity demanded is_________ million units, and the excess supply is _______million units.