Wednesday, February 19, 2014

AP Micro Example: Perfect Competition and a change in cost AND Market Price. Does not get better than this!!

For Teachers and/or Students of Microeconomics here is an excellent article you can use to illustrate how changes in variable costs and a change in market price affects a producer ("Firm") that operates in a "Perfectly Competitive" market.
Dairy farmers squeezing white gold from cows
Most milk manufactured in Wisconsin becomes cheese, but it’s also turning into white gold for dairy farmers in America’s Dairyland, because demand has never been higher and prices for it are rising at meteoric rates. 
A dramatic increase in dairy exports and limited milk production have combined to create the near-record high prices dairy farmers are receiving for their milk from customers like cheese producers. 
Combined with the near-record low prices they’re paying for corn to feed their cows, dairy farmers should see increased profits through this year, a leading dairy economist said.
“This is the dairy farmers’ year to enjoy,” said Mark Stephenson, the director of the UW-Madison’s Center for Dairy Profitability. 
Read more:
Let's go to the GRAPHS!  Each slide has has its own narration so I will let them speak for themselves.  If you see any errors or omissions please let me know. 

I hope this helps you understand changes in costs and prices in a Perfectly Competitive Market.

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