Problem
Beginning with the equations, suppose a growth hormone is introduced that allows dairy farmers to offer 125 million more gallons of milk per year at each price.
a. Construct new demand and supply curves reflecting this change. Describe with words what happened to the supply curve and to the demand curve.
b. Graph the new curves and determine equilibrium price and quantity.
c. Determine equilibrium price and quantity by solving the equations mathematically.
d. Suppose the government set the price of milk at $3 a gallon. Demonstrate the effect of this regulation on the market for milk. What is quantity demanded? What is quantity supplied?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.