A Study of the Milk Market

1316 Words Jan 11th, 2018 5 Pages
This means that at any moment that one thinks of eating cereal for breakfast then milk must be included and this brings the assumption that milk is a complement to cereal. Considering how complements relate it implies that when more people start eating cereal for breakfast then the quantity of milk demanded will increase. This will lead to a higher demand for milk causing a shift of the demand curve to the right. With this shift the price and quantity of milk will increase.
There is a mad cow disease epidemic
The effects of mad cow disease on animals include among many others decreased milk production. When the milk production decreases then the quantity of milk supplied will definitely decrease. When the supply decreases yet the quantity demanded and the demand remain constant then the price of milk will increase. A mad cow disease epidemic will therefore affect the supply curve of milk causing a shift to the left; characteristically this will lead to an increase in price. In this case it is assumed that the epidemic has affected the only source of milk and there are no alternative places of obtaining milk.
The price of milk increases
Whenever the price of milk goes up it is expected that the…