The combination of high global demand for milk and variable weather has led to a rapid rise in the price of milk. Cheese is made from milk (sorry to state the obvious!) and so cheese prices have risen to a new high in excess of £2000 per tonne and further price hikes are expected. One conclusion that could be drawn from this is that it is better to have a takeaway pizza now rather that in a month’s time, but what other effects is this price increase for milk likely to have?
Cheddar hits £2,000 a tonne as global milk demand soars Guardian (15/7/07)
Questions
| 1. | Identify the key determinants of demand for cheese. |
| 2. | Using diagrams as appropriate, illustrate and explain the changes that have taken place in the market for cheese. |
| 3. | Assess the extent to which the price increase for milk can be passed on to consumers of associated products like yoghurt and cheese. |