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Findingthe milk price high,government decides to reduce market price by giving subsidiesto producers of milk. Analyseits effects on (a) GDP and (b) welfare. |
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Answer» Solution :Reducingmarket price of MILK will encourage households toconsume more milk . This in turn will raise productionof milk. As a result GDP will RISE. Increase in consumptionof milk will have POSITIVE effect on health of thepeople. This will raise efficiencyandin turn welfare. |
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