Question: Consider the market for milk. For each of the following events, state (a) whether it affects supply or demand (or both, or neither), (b) which direction supply/demand shifts, (c) the effect on price, and (d) the effect on quantity.
1. The price of orange juice, a substitute, rises.
2. In order to support dairy farmers, the government places a price floor on milk that is above the current equilibrium price of milk.
3. The government places a price floor on milk that is below the current equilibrium price of milk.
4. The number of children who drink milk and the number of farmers who produce milk increase at the same time.
5. For an unknown reason, the current price of milk is below the equilibrium price, and there is a shortage.