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AP® Macroeconomics

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Policy and Market Change: Soy Milk and Dairy Milk

APMACR-XAXET3

Suppose soy milk is a substitute for dairy milk.

If the U.S. government ended a subsidy program for dairy farmers then which of the following is most likely to occur?

I. Increased short-run dairy prices

II. Decreased competition

III. Increased consumption of soy milk.

A

I Only

B

II Only

C

III Only

D

I and II

E

I, II and III