The Milk Market

Disregard the new tax from number three. Now assume the government imposes a price ceiling of $100 in this market, as the result of protest of price gouging by sellers. What would happen to the price and quantity in this market?

            However, if the school allows a competing student the right to sell ice cream on school property, it could change the price of ice cream. The price of ice cream is lowered due to technology.  The invention of better ice cream machines or an idea to make better use of counter space can lower a firm’s cost and raise the quantity of ice cream it supplies.  Prices could also be increased due to input prices. Less ice cream is supplied when workers need be paid more, therefore ice cream machines cost more, or even ingredients like

#5. Other things equal, what effects would each of the following have on aggregate demand or aggregate supply? In each case use a diagram to show the expected effects on the equilibrium price level and the level of real output.

2. Total revenue falls as the price of a good is raised, if the demand for the good is ( )

There is a market trend of supply and demand in an economy and this is measured through the equilibrium process and the actors that affect supply and demand. The farmers are the market suppliers and hence they determine their produce by measuring the equilibrium market prices and quantities. The suppliers are aware that when the prices of commodity increases the demand of the same commodity decrease and when demand increases supply decreases until the market reaches an equilibrium point. There are various factors that affect

milk as a loss leader, grocery stores can bring in more customers because milk is a necessity

[C] The quantity demanded of coffee will decrease, and the demand for tea will increase.

C. Any gain or loss in the firm's revenue from increasing its price would depend on the price elasticity of demand: The more elastic the demand, the higher the revenue potential from a price increase.

Apple juice and orange juice are substitutes for consumers, so the fall in the price of apple juice decreases the demand for orange juice. The demand curve for orange juice shifts leftward. The increase in the wage rate paid to orange grove workers raises the cost of producing orange juice. The supply of orange juice decreases and the supply curve of orange juice shifts leftward. The net effect of these events decreases the equilibrium quantity but has an undetermined effect on equilibrium price. If supply decreases by more than the demand, the shift in the

Canada 's dairy sector operates under a supply management system based on planned domestic production, supervised pricing and strict controls on dairy product imports. The system was adopted for industrial milk in the early 1970s to address the unstable prices, uncertain supplies and fluctuating producers and processor revenues which were common in the 1950s and 1960s. By enforcing this system, farmers attempt to strike the most accurate balance between supply and demand of dairy products (Canadian Dairy Commission, 2010).

Based on the initial declaration of findings from the Conference Board of Canada analysis of supply management, consumers are highly affected by the system as dairy prices in Canada are

b. Suppose the price for the ice cream is currently $5. Will this price result in a shortage or a surplus? How much is the shortage or surplus? What would you expect to happen to price?

These shifts in supply and demand would influence price, quantity, and market equilibrium because of the natural disasters, shift in prices or speculation the supply of coffee decreases, which would cause a significant product shortage for consumers. Due to a shortage, consumers would to pay higher prices in order to purchase coffee and all coffee producers would then demand a higher price in order to produce more products. Higher prices are beneficial to the producers of the product, but consumer would purchase fewer products. Lower product pricing would discourage coffee production, but would benefit consumers. Both supply and demand would balance consumption, which is demand and production, which is supply.

Evaluate each of the following changes in supply and/or demand. How will each affect equilibrium price and quantity in a competitive market? Will price and quantity rise, fall, or be unchanged? Based on shifts, will the answers be indeterminate?

Brennan's Farm produces and sells milk. The market for milk is perfectly competitive. The market price of milk is $2.50 per gallon. The relationship between the farm's output and total costs is shown in the table above.