In 2014 some supermarkets reduced the price they were willing to pay farmers for milk to below what was then the market equilibrium price. They passed the lower price onto the consumers in order to try and encourage them into the store. The government then fixed an effective minimum price which the supermarkets had to pay the farmers. These two actions are shown in the diagram. [Diagram] What would be the outcome after the supermarket action and then the government action?
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✓ Correct answer
D: shortage of 13000 litres a surplus of 7000 litres
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