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Question Description

Consider the market for milk in Canada.

1. In respect to the market for milk in Canada. Consider our determinants of market structure andbriefly make an argument as to what market structure milk producers (Dairy Farmers) are a partof (Ignore the government intervention in this industry, focus on the milk producers alone). NoteSaputo, Dairyland, Island Farms are bottling companies, not Dairy Farmers.



2.Graph a representative milk producer in the short-run – assume they are earning negativeeconomic profit, with a price above their shutdown point.


3.Explain briefly, what we would expect to happen in the market for milk in Canada as we move tothe long run. That is, what would we expect to see happen to the price, number of milkproducers and profit of milk producers?


4.Graph a representative milk producer in the next short-run period demonstrating the outcomesexpected in Q3 above.

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