Friday, March 25, 2011

Increased Supply Results in Decreased Profits

In 2009, the dairy industry had a huge increase in the number of dairy cattle due to a technology that would allow dairy farmers to choose the gender of cows being born. Most choose females, as a means of increasing the amount of milk that could be produced. This increase in the amount of milk has resulted in an increase in the milk supply, a decrease in milk prices received by dairy farmers and a decrease in dairy farmer's profits. This is consistent with the competitive firm model as presented in Prin. of Microeconomics.

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