So the price of milk has gone up. As usual, the supply and demand logic comes into play. Higher demand with decreasing supply brought about by drought in Australia and removal of subsidies from the European Union.....sure, for anyone who had studied basic economics, or anyone with common sense for that matters, will know that it is a no brainer that the price of milk HAS to go up.
Now, let us decipher this closer. Drought in Australia. An issue that has been ongoing for the last 5-6 years. It wasn't any new news. Why not increase price years before? Why now? Increase in demand worldwide. So suddenly every single person on earth is rushing to buy milk? "No! Increased population! Increased demand" shouts some economists-wannabes. "No! China has become more westernized and realized the importance of milk!" shouts another. I do not know which one is true or maybe both are. But 1 thing I know for sure is that demand comes in slowly. The time mechanism has to play a part. Keynesian law dictate that demand and price is rigid in the short run. So are we in the long run now? I thought in the long run we are all dead. I suspect a cartel in play here.
Now, let us decipher this closer. Drought in Australia. An issue that has been ongoing for the last 5-6 years. It wasn't any new news. Why not increase price years before? Why now? Increase in demand worldwide. So suddenly every single person on earth is rushing to buy milk? "No! Increased population! Increased demand" shouts some economists-wannabes. "No! China has become more westernized and realized the importance of milk!" shouts another. I do not know which one is true or maybe both are. But 1 thing I know for sure is that demand comes in slowly. The time mechanism has to play a part. Keynesian law dictate that demand and price is rigid in the short run. So are we in the long run now? I thought in the long run we are all dead. I suspect a cartel in play here.
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