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4. Assess the markets for dairy products (milk, eggs, butter) where farmers, wholesalers, and retailers (but, not households) interact. How do these markets meet the four criteria for perfect competition? In what ways do they fail to meet the criteria? Describe the consequences of a government-imposed price floor in these markets.

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Kristelle Balando
Kristelle BalandoLv10
29 Sep 2019
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Related questions

When people talk about the merit of Adam Smith's "invisible hand," "laissez faire," and how government should leave the market alone and it is only then the economy will work at its the best, the market they are referring to (whether or not they know it) is the perfectly competitive.

But how common is perfect competition really in real life?

What were the common or are the common examples of perfect competition? And think about whether they satisfy the criteria of perfect competition. If they do, do you think these constitute the majority or minority of markets we interact with in the real world? If they don't, in what ways do they fail to qualify? If even the typically used examples do not meet the criteria, what does it say about the prevalence of perfect competition in the real world and, in turn, the validity of the arguments above? Does that mean that the government has its justification for meddling with the markets all the time? Where do we draw the line and how do we determine a healthy balance?

NOTE: I am just trying to wrap my head around these concepts so what I would like to know is of these 6 available options, which three, would be the simplest in terms of theory to explain? _______________________________________________________________________ Thevast majority of economists are classically trained, which means we tend to see the free and unencumbered functioning of the marketplace as yielding the best economic outcomes. Where policy is needed is when the market fails to produce socially acceptable results. A prime example of market failure has to do with pollution: unless polluters are forced to incorporate into their financial calculations the costs of the pollution they cause, they will overproduce and continue to destroy the environment. The following list describes situations where the government may want to step in: ____________________________________________________________________________________________________________________________ 1. Monopoly power: Markets may fail to control the abuses of monopoly power.---------- 2. Missing markets: Markets may fail to form, resulting in a failure to meet a need or want, such as the need for public goods, such as defense, street lighting, and highways. ------3. Incomplete markets: Markets may fail to produce enough merit goods, such as education and healthcare.------- 4. De-merit goods: Markets may also fail to control the manufacture and sale of goods like cigarettes and alcohol, which have less merit than consumers perceive. --------5. Property rights: Markets work most effectively when consumers and producers are granted the right to own property, but in many cases property rights cannot easily be allocated to certain resources. Failure to assign property rights may limit the ability of markets to form.-------- 6. Information failure: Markets may not provide enough information because, during a market transaction, it may not be in the interests of one party to provide full information to the other party. ______________________________________________________________________________________________________________________________________Pick three from this list and explain what types of policies might be proposed to offset the market’s failure. Explain why your proposals might work but also if the policies themselves might have negative side effects.

Please read the article below and answer the following question, use economic analysis to answer the question. In your answer, ensure that you use relevant economic theories, concepts, and/or diagrams.

C) What other public policy initiatives apart from a tax on dairy products can the government employ to address animal welfare and environmental concerns? Discuss the pros and cons of these.

The Australian dairy farming industry is in a state of crisis. Cheap dairy products and fluctuations in both the domestic and global markets have taken a financial toll on farmers. Consumers have rallied to help struggling dairy producers. But this is only half the problem. The true cost of dairy is also paid by dairy cows and the environment. Welfare problems Despite the idyllic image of outdoor farming, several industry practices negatively affect dairy cows. To meet production demands, dairy cows are subject to a continuous cycle of impregnation, induced calving, and milking. Tail-docking and horn removal are routinely performed without pain relief. Lameness is another major animal welfare problem, often the result of environmental pressures, such as tracks, herd size, and handling. The average lifespan of a dairy cow is six to seven years, whereas generally, cows can live for 20 to 25 years. One of the most controversial issues is young bobby€ calves. A bobby calf is a newborn calf, less than 30 days old, who has been purposely separated from its mother. Immediately after separation, the cow and calf call out and search for each other. Most bobby calves are slaughtered within the first week of their life. Handling and transport pose added problems for young calves who have not developed herding behaviors, are vulnerable to stress, and are forced to go without their mother's milk. Each year, 450,000 bobby calves are slaughtered. Dairy farmers are being milked dry, but let's remember the real cost of milk May 25, 2016, 6.11 am AEST, the dairy industry faces a number of welfare and environmental issues. Cow image from www.shutterstock.com Advocacy groups frequently uncover the routine abuse of bobby calves in Australian abattoirs and challenge the dairy industry to do something about it. Yet aside from the wider ethical questions over the use and exploitation of animals, farmers are not legally doing anything wrong. This is because the treatment of animals operates in a legal context where animals are considered absolute property. What's more, farm animals are exempt from the provisions of anti-cruelty legislation. Codes of practice are practically useless because they promote low welfare standards and are unenforceable. The environmental impact As well as systematic welfare problems, livestock farming is, both directly and indirectly, one of the most ecologically harmful human activities. The Australian livestock sector is worth A$17 billion and dairy cattle farming is a A$4.2 billion industry. In Australia, livestock farming accounts for 10% to 16% of greenhouse gas emissions, with dairy farms contributing 19% of this or 3% of total emissions. Methane emissions, from digestion and manure, and nitrous oxide from livestock are significant contributors. Globally, the livestock sector is responsible for more greenhouse gases than the world's transport. Livestock production accounts for 70% of all agricultural land, including the land used to grow crops to feed these animals. Animal agriculture is a key factor in land degradation, deforestation, water stress, pollution, and loss of biodiversity. Livestock farming will also be affected by climate change, particularly changes in temperature and water. The quantity and quality of pasture and forage crops will also be affected. Diseases may increase due to fluctuating weather and climate. Emissions can be reduced Just as the energy sector is attempting to transition to low-carbon energy sources to tackle climate change, the agricultural sector needs to transition to an ethical and sustainable alternative. From the current crisis, there are several opportunities for farmers to seize. Large transitions are possible in land use, production, output, and profitability. Places such as Gippsland in Victoria, which currently produces 19% of Australia's dairy, have the opportunity for agricultural development based on apples and brassicas, such as broccoli, kale, cauliflower, cabbage, turnip, and mustard. Some of these crops are already popular in the region. As a result of climate change and increasing temperatures, some areas will be more suitable than others. While still in the stages of research, perennial grain crops that store more carbon, maintain better soil and water quality, and manage nutrients better than annuals have the potential to contribute to sustainable agriculture. New land uses could also include carbon plantings, biofuels, and bioenergy crops. Investing in further research for alternatives to livestock farming is needed. Some have argued that livestock emissions can be technically mitigated by modifying animal feed, better managing pastures, carbon sequestration, and manure storage. Welfare issues remain But technical mitigation does not address the endemic animal welfare problems in the livestock industry. Consumer demand is one of the most powerful strategies to combat animal welfare and environmental problems. Research shows that we must reduce food waste and losses in the supply chain and change our diets toward less resource-intensive diets, such as plant-based diets. Doing so would cut emissions by two-thirds and save lives. It's possible to eliminate animal suffering and reduce carbon emissions by reducing and replacing livestock production and consumption. Alternatives to dairy milk include soy and almond milk. Soy milk is nutritionally comparable to dairy milk and has a significantly smaller environmental footprint. Policy initiatives also need to address these issues. The Food and Agriculture Organization's Livestock's Long Shadow report recommends a policy approach that correctly prices natural resources to reflect the full environmental costs and to end damaging subsidies. In the interim, higher taxes on meat and other livestock products will be necessary to improve public health and combat climate change. Denmark, for instance, is considering proposals to raise the tax on meat after its ethics council concluded that climate change is an ethical problem. Governments everywhere need to have a transitional plan for livestock producers and workers - one that helps to cultivate the ethical and sustainable agricultural endeavors of the future.

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