The Economic Atmosphere of Home business

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Milk products are generally purchased by all households, however liquid milk accounts for the largest share of this market.

Other market drivers for these milk products are the increased variety of products including flavoured milk, and also the increased advertising efforts by companies. MAIN COMPANIES INVOLVED IN PRODUCTION OF MILK PRODUCTS AND THEIR MARKET SHARES

Milk and milk products producing firms assume an oligopoly market structure where there are restrictions or barriers to entry, these barriers to entry are associated with health issues and also the prevention of unhealthy competition, market prices are causing these firms to shut down and also the farmers are under pressure in the production of milk to these prices.

PRICING FEATURES OF MILK AND MILK PRODUCTS

OIL PRICES BETWEEN AUGUST 2003 AND AUGUST 2006

Due to the decreased level of supply, the supply curve will shift upwards from supply curve one to supply curve two as shown in the diagram, also bearing in mind that oil has no close substitute the demand for oil is inelastic and therefore the demand for oil does not decrease in this case.

IMPACT OF THE CHANGE IN OIL PRICES SINCE 2003 ON FIRMS THAT PRODUCE MILK AND MILK PRODUCTS

The rise in oil prices since 2003 has caused an increase in the cost of production of milk and milk products, a rise in oil prices is always inflationary and therefore due to the fact that in one way or another oil products are used in the processing and production of milk products then we expect that the cost of production of milk products.

A rise in the price of petroleum products will always be inflation ally and will cause a rise in prices in almost all the products in an economy.

Keynote publications (2006) Market Reports- Milk ; Dairy Products Market Report, retrieved on 16th February

Research and markets (2003) Milk and Dairy Products Market Report retrieved on 15th February

Oil prices between the year 2003 to 2006 (2006) retrieved on 15th February