Market researchers have studied the market for milk, and their estimates for the supply of and the demand for milk per month are as follows:

Price per gallon	Quantity demanded (millions of gallons)	Quantity supplied (millions of gallons)
$10	100	500
8	200	400
6	300	300
4	400	200
2	500	100

 a. Using the data, graph the demand for and the supply of milk. Identify the equilibrium point as E, and use dotted lines to connect E to the equilibrium price on the price axis and the equilibrium quantity on the quantity axis. 

b. Suppose the government enacts a milk price support of $8 per gallon. Indicate this action on your graph, and explain the effect on the milk market. Why would the government establish such a price support? 

c. Now assume the government decides to set a price ceiling of $4 per gallon. Show and explain how this legal price affects your graph of the milk market. 

1. What objective could the government be trying to achieve by establishing such a price ceiling? 

2. What are the advantages and disadvantages of the price system? 

3. Consider this statement: “Government involvement in markets is inherently inefficient.” Do you agree or disagree? Explain.