Alexander’s Supply and Demand Assignment

Source: http://www.stuff.co.nz/business/90201571/demand-for-organic-milk-outstrips-supply

Market: Organic Milk in New Zealand

Over the past few years, demand for organic milk in New Zealand has steadily risen as purchasers have attained an increased awareness regarding the differences between organic and conventional milk. At the same time, the number of organic dairy cows has decreased since 2010. These two factors combined have resulted in an increase in prices for organic milk.

The primary relevant demand determinant in this case is buyer preference, which is influenced by the increased quality of the product in comparison to the conventional alternative. The primary relevant supply determinant is the number of sellers since the lack of supply is as a result of producers not being able to keep up with demand.

It might be worth noting that the supply deficiency will likely be resolved in the near future as more dairy farmers consider producing organic milk due to the higher price that it has been selling for due to the shortage. In the meantime, the price of organic milk will rise until the equilibrium price is reached.

supplyanddemandgraphUntitled

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