In the absence of government intervention, the price would adjust so that the quantity supplied would equal the quantity demanded at the equilibrium point E 0 , with price P 0 and quantity Q 0 . Howev...In the absence of government intervention, the price would adjust so that the quantity supplied would equal the quantity demanded at the equilibrium point E 0 , with price P 0 and quantity Q 0 . However, policies to keep prices high for farmers keeps the price above what would have been the market equilibrium level—the price Pf shown by the dashed horizontal line in the diagram.
In the absence of government intervention, the price would adjust so that the quantity supplied would equal the quantity demanded at the equilibrium point E 0 , with price P 0 and quantity Q 0 . Howev...In the absence of government intervention, the price would adjust so that the quantity supplied would equal the quantity demanded at the equilibrium point E 0 , with price P 0 and quantity Q 0 . However, policies to keep prices high for farmers keep the price above what would have been the market equilibrium level—the price Pf shown by the dashed horizontal line in the diagram.
