Milk prices plummet – Supply and demand

Here is a great article to explain why too much supply can cause prices to crash. Milk producers across the EU have driven their tractors to Brussels in protest of what that see as uneconomic milk prices. The simple problem is far too much milk is being produced. Some farmers have even had to dump some of their milk and withhold their supply to try to raise prices. Click read more for a GCSE style question to go with this article.

1. Explain using a supply and demand diagram, how dumping milk and withholding supply will affect the price of milk. (4 marks)