Problem
The market for milk is in equilibrium with price $4.50 per gallon and quantity 10 million gallons. In the month of April there is a major virus outbreak among cows and thousands of cows are killed. Simultaneously, given the trade war with China, wheat exports drop and the resulting supply increase in wheat causes a steep price decrease for breakfast cereals. In May, the milk market equilibrium is at $5.00 for 12 million gallons. Draw a diagram to show the old equilibrium and the change in equilibrium.