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SUPPLY AND DEMAND - Essay Example

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When a scientific study indicates that the consumption of milk is necessary for healthy bones, a situation arises whereby the demand (quantity demanded), supply (quantity supplied) all shoot up. In a world where consumers are health conscious, such vital medical findings would…
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Download file to see previous pages after awhile, as the market continues to flood with milk suppliers seeking to take chance of the soaring demand, competition among the suppliers will result in customer retention strategies such as lowered prices and better quality product. The overall supply and demand, however, will remain stable in line with this medical research finding. This is assuming that another cheaper alternative to milk, that is equally beneficial to the health of bones, is not touted by such scientific studies.
Mad cow disease (bovine spongiform encephalopathy) is a transmissible, generative, deadly and slowly progressive disease of cows which is caused by a prion that can also cause brain and CNS diseases in humans who consume products and milk from these unhealthy cows. The causative agent is not removable by heating or thorough cooking and therefore in case of an outbreak of the mad cow disease, the demand and sales of local milk will take a considerable tumble (with the demand curve shifting to the left). The weak and meager supplies come from the fact of reduced productivity of sick cows and health inspection regulations. The weak demand will result in very low prices of the commodity. This is because the disease is known to progress slowly and therefore in an outbreak situation the consumer will treat with great skepticism even those who claim their cows are healthy. Assuming a trusted and health approved foreign supplier comes in with their milk; such milk will be sold at very high prices (because of scarcity of the product and other costs such as transport) (Sloman & Sutcliffe, 2003). Their product will be on high demand thus raising the need for higher supplies of the foreign brand. There will equally be increased demand and supply for milk substitutes such as almond milk which will also portend higher prices for the substitute commodities.
Almond milk is a common cow (dairy) milk substitute obtained from almond. If the price of almond decreases, the consumers will go for ...Download file to see next pagesRead More
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