A detailed description with graphs of how milk would have been determine in the abstance of government involvement in the market
How milk would have been determine?
Please clarify and repost.
Your recommendations,with justification ,of whether this form of intervention is appropriate for achieving the government's objective of promoting a healthier lifestyle among the poor
To understand how milk prices would be determined in the absence of government involvement in the market, we need to look at the basic principles of supply and demand.
In a free market without government intervention, the price of milk would be determined by the interaction of supply and demand. Let's break down the analysis step by step:
1. Supply of Milk:
The supply of milk is influenced by factors such as the number of milk producers, technological advancements in milk production, weather conditions affecting cattle feed, and other production costs. As milk suppliers interact with the market, they aim to maximize their profits. Generally, as the price of milk increases, suppliers are incentivized to produce more milk to take advantage of higher profits. This results in an upward-sloping supply curve.
2. Demand for Milk:
The demand for milk is influenced by factors such as population size, consumer preferences, income levels, and the availability of substitutes like plant-based milk alternatives. As the price of milk increases, consumers may seek alternative beverages or reduce their milk consumption, leading to a decrease in demand. This results in a downward-sloping demand curve.
3. Equilibrium Price and Quantity:
The equilibrium price and quantity of milk can be determined by finding the point where the supply and demand curves intersect. At this equilibrium point, the quantity of milk supplied by producers equals the quantity demanded by consumers.
Now let's consider a hypothetical scenario where the government does not intervene in the milk market. Here's a step-by-step process to create a graph that visually represents how milk prices might be determined in this scenario:
1. Plotting the Supply Curve:
Start by drawing an upward-sloping supply curve on a graph, where the vertical axis represents the price of milk, and the horizontal axis represents the quantity of milk supplied. The exact shape and position of the supply curve depend on various factors affecting milk production.
2. Plotting the Demand Curve:
Next, draw a downward-sloping demand curve on the same graph, where the vertical axis represents the price of milk, and the horizontal axis represents the quantity of milk demanded. The specific shape and position of the demand curve depend on various factors affecting milk consumption.
3. Finding the Equilibrium:
Identify the point where the supply and demand curves intersect. This intersection represents the equilibrium price and quantity of milk in a free-market scenario without government intervention.
4. Determining the Equilibrium Price and Quantity:
Label the equilibrium point on the graph with the corresponding price and quantity values. The price at the intersection point represents the equilibrium price of milk, while the quantity represents the equilibrium quantity demanded and supplied.
It's important to note that this is a simplified analysis, and the actual determination of milk prices in a free market can be more complex due to various real-world factors. However, these basic principles of supply and demand provide a foundation for understanding how milk prices might be determined in the absence of government involvement.