WK1 Supply in Perfectly Competitive Markets Discussion

Course Learning Outcomes: 1 & 4

Topic/s of Primary Focus: Supply in Perfectly Competitive Markets

(May also include content from previous topics.)

Read the following excerpt from ABC News article ‘Dairy farmers exiting the industry across NSW due to low milk prices’ (30 June 2018) https://www.abc.net.au/news/rural/2018-06-30/dairy…

Farmers across New South Wales are actively making plans to exit the dairy industry.

For many farmers, the last straw came as they received confirmation from processors this week that they could be facing another year producing milk below the cost of production.

“It’s quite disgusting actually, after the positive reports and Bega Cheese talking up a strong market at the moment,” said dairy farmer Michael Shipton.

Drought, rising input costs and fatigue are just some of the factors farmers say are undermining the viability of farms in traditional dairy regions.

The farm gate milk price was below expectations for many suppliers.

Bega Cheese announced the 2018–19 opening milk price of $6.70 per kilogram of milk solids or 50 cents per litre for NSW producers — a 3 per cent increase on last year.

The ABC spoke to half a dozen Bega Cheese suppliers who all shared their dissatisfaction with the dairy processor describing the price as “very disappointing”.

Mr Shipton, who operates just outside of Bega, said he would have to reduce the number of cows and staff over the coming months.

“For 20 cents a kilogram increase on last year, it’s just not enough for farmers in the valley to cover the costs,” he said.

“Input costs are up — grain prices, fuel, electricity, and on top of that wages go up on the first of July.”

Task:

Explain why some farmers producing milk would be exiting the market in the circumstances described above in June 2018. And why even though it is suggested that they were ‘producing milk below the cost of production’ in the previous year, that they had not already shut down in the short run.

Ensure in your answer that you use concepts such as shut down, exit, short and long run, profit, variable and fixed costs, and cost curves – and that you use diagrams to support your explanations where relevant.

Format:

The format of your response should be an essay-style response.
You do not need subheadings or subsections.
You do not need to spend as much attention on formal essay structure as you might for a persuasive or research-based essay. Instead you should focus on communicating your ideas in a clear and concise manner and making sure there is a logical flow of ideas and explanation.

Word Limit:

800 words (excluding diagrams and references)

Diagrams:

As stated in the task, you should include diagrams where relevant. Where you use diagrams, they should be created by you. You could either draw them by hand and scan/photo them into your document. Or prepare them electronically. However, they must be your own work. You should not paste in diagrams from the internet or the textbook, even with referencing, as this will not adequately show the grader your understanding of these diagrams and models.

Referencing:

This is not a research assignment. So you do not necessarily need to find other references. You should answer the question based on what you have learnt in the course and the excerpt provided.

However, it is important that if you do take content directly from other sources including course materials, both quoting and paraphrasing, that you appropriately reference to show what is your own original thoughts and what ideas you have borrowed from others. Please refer to the Academic Integrity Module within the course for further guidance and links regarding referencing, plagiarism, and academic integrity.

Where referencing is used, it can be in any standard style, so long as it is consistent. The Harvard referencing style is preferred, as it is the standard in Economics and is also common in Business disciplines.https://www.adelaide.edu.au/writingcentre/resource…

All submissions will be analysed with the assistance of Turnitin, checking for plagiarism against other students in the class and external sources.

Submission and Feedback

Students must submit the assignment by the due date via the electronic submission portal on MyUni (the same page you downloaded this pdf!). https://community.canvaslms.com/t5/Student-Guide/How-do-I-upload-a-file-as-an- assignment-submission-in-Canvas/ta-p/274

It is students’ responsibility to ensure that it is correctly submitted by the due date. Make sure that you see and check that is says ‘Submitted’.

Late submissions will generally *not* be accepted at all. Not even one minute late. This might seem more strict than some of your other classes, but do keep in mind that we also have a ‘best 4 of 5’ policy on the Assignments.
If you have a medical or other circumstance that you believe may allow an extension, please email the course coordinator as soon as practical, and generally this must be before the due date has passed.

Assignments will be graded, with grades and feedback provided within MyUni approximately one week after the submission due date.