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InterviewSolution
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Finding the milk price high, government decides to reduce market price by giving subsidies to producers of milk. Analyse its effects on (a) GDP and (b) welfare. |
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Answer» Reducing market price of milk will encourage households to consume more milk . This in turn will raise production of milk. As a result GDP will rise. Increase in consumption of milk will have positive effect on health of the people. This will raise efficiency and in turn welfare. |
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