Chapter 4: Problems 2, 3, and 4 (somewhat amended). 1. In 1991, the price of milk in the U.S. fell 30 percent. Senator Leahy of Vermont, a big milk-producing state, supported a law in the U.S. Congress to put a floor on the price. The floor was $13.09 per hundred pounds of milk. The market price was $11.47 per hundred pounds of milk. Sketch out supply and demand curves to help you answer the following. a. Explain the effects of this legislation (use the sketch I asked you to make--show the market equilibrium at $11.47 and then show the price floor of $13.09 and answer me in words) b. Dairy farmers supported this legislation, while consumers opposed it. Why? c. Economists frequently argue against price floors because of the surpluses and associated problems that they create. What are some of the potentially negative side effects of interference in the milk market? 2. More than 20 states have laws outlawing price gouging during a state of emergency, which might be declared after a hurricane or an earthquake. These laws prohibit price increases on basic necessities, such as gasoline. Which of the arguments against price ceilings might not be significant during a state of emergency? 3. Donors of organs for transplantation or medical research are prohibited from charging a price for these organs (there is a price ceiling of zero). Will this result in a shortage? How will the market cope with the shortage