Question 1: Supply, Demand and Government Interference This Chart represents the supply and demand for milk in a certain country right now. Supply and Demand for Milk $2.20 $2.10 $2.00 $1.90 $1.80 $1.70 Price per Liter $1.60 $1.50 $1.40 $1.30 $1.20 $1.10 10.00 11.00 12.00 13.00 14.00 15.00 16.00 17.00 Quantity ( Millions of Liters) -Demand -Supply You can move this line to mark the graph, or if you have a stylus, draw your own line. Part 1: Right Now, what is the price of Milk in Dollars per liter? How can you tell? Type your answer and explanation here: Part 2: A politician promises that if elected he will pass a law to limit the price of milk to $1.30 a liter with stiff criminal penalties for anyone who sells milk at a higher price. If he wins and passes the law, what would you expect to happen? Please mark the graph to illustrate your conclusion. Please say what your line is and give some approximate numbers. Type your answer and explanation here:Question 2: Pure Competition $400 MC $350 ATC Top Line .. ... $300 AVC Middle Line .... . ... . $250 Lower Line $200 $150 3 9 10 11 12 13 14 16 17 18 19 20 Quantity There are three dotted lines on the chart representing three different prices for the product. Pick one of the three lines to answer these questions. (Any line you pick is OK. ) Which line did you pick: Top Middle or Lower ? The line you picked represents the price of the product in a Purely Competitive market. Based on this chart and the line you have chosen, answer the following questions. Be sure to use the characteristics of a Purely Competitive market to explain your answers. What can you tell me (a) about the company's efficiency? (b) about the company's economic profit or loss in the short run? (c) Is this likely to change in the long run? Type your answer and explanation here