Argument 75 范文

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Argument 75
Arg 75Regulation of retail milk prices

The following appeared in a letter to the editor of a Batavia newspaper.

"The department of agriculture in Batavia reports that the number of dairy farms throughout the country is now 25 percent greater than it was 10 years ago. During this same time period, however, the price of milk at the local Excello Food Market has increased from $1.50 to over $3.00 per gallon. To prevent farmers from continuing to receive excessive profits on an apparently increased supply of milk, the Batavia government should begin to regulate retail milk prices. Such regulation is necessary to ensure fair prices for consumers."

Write a response in which you discuss what questions would need to be answered in order to decide whether the recommendation is likely to have the predicted result. Be sure to explain how the answers to these questions would help to evaluate the recommendation.


G1: The department of agriculture in Batavia reports that the number of dairy farms throughout the country is now 25 percent greater than it was 10 years ago.

G2: During this same time period, however, the price of milk at the local Excello Food Market has increased from $1.50 to over $3.00 per gallon.

C1: To prevent farmers from continuing to receive excessive profits on an apparently increased supply of milk, the Batavia government should begin to regulate retail milk prices. Such regulation is necessary to ensure fair prices for consumers."


A1(G1): The increase in the number of dairy farms implies that the supply of milk has increased.

A2(G2): The increase of the prices resulted from the increasing cost of milk in the farms.

A3(G2): The data in a local market can reflect the overall national trend.

A4(C1): The proposed policy is feasible.


According to the letter, the government should regulate the retail milk prices given the facts that there are more dairy farms in the market but the prices of milk in Excello has doubled. We need to ask a number of questions about the dairy farms nationwide, Excello Food Market, the retail milk prices and profits and the proposed government intervention in order to evaluate the recommendation.

To begin with, we need to ask why the number of dairy farms has increased and how the change affects the supply of milk. It is unreasonable to assume that the 25% increase in dairy farms would necessarily lead to the increased supply of milk. Maybe the dairy farmers have decided to reduce their farm sizes due to the changes of technologies that favor the smaller scale of production. Or perhaps more small or medium businesses join the industry and drive away some larger dairy farms out of business which increases the number of dairy farms but reduces the total production. If any of these scenarios occur, the supply of the milk would not increase as expected. Regulating the retail milk price would not be necessary.

We also need to ask questions about the local Excello Food Market. For one thing, to what extent is the local market representative of the overall national market? Maybe Excello has experienced inflation that is more intense than the national average and the milk prices have increased as a result. Or perhaps the transportation network is less developed here and the cost of logistics has driven up the local retail milk prices but the national milk prices remain stable. It is not a good idea to propose any national policy merely based on a local case unless the local case can be generalized to the national market.

The third area we need to ask questions about is whether or not dairy farmers have made excessive profits that are unfair to the consumers. It is important to bear in mind that retail milk price is affected by a range of factors and the price of milk charged by dairy farmers is just part of it. Maybe the retail prices have doubled due to the increasing cost of fuel that drives up the cost of transportation, an issue we discussed briefly in the previous paragraph. Or perhaps the real estate prices of Excello has skyrocketed and the higher shop rents have led to the increase of retail prices. Also, it could be the increasing cost of cattle feeding or government taxes on dairy farms that are responsible for the increase of milk prices charged by fairy farmers. All these issues have to be taken into account before we can decide if the dairy farmers have made any excessive and unfair profits.

Finally, it is important to ask exactly how the goverment could regulate the prices and how the policies would affect the livelihood of the people. If Batavia is a free market economy, it may not be legal or politically wise for the government to impose any regulation on the milk prices. The policy could be challenged in the court and brought the government into legal trouble. Politically, a policy that contradicts the free market principle may draw severe criticism from different fronts and render the government unpopular and ineffective. Economic theory also predicts that price regulation would lead to the shortage of the goods in the market. Given the importance of milk to peoples daily diet, we need to ask if the government really wants to bring chaos to peoples life.

In conclusion, despite the good intention of the letter, we need to investigate this matter thoroughly to answer the questions discussed above before we could decide if the recommendation is reasonable.



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