represent potential rather than actual supply. Area supply functions 

 for the 1960 farm numbers resource base are presented in Appendix 

 Table 2. The same basic supply relationship expanded using the 1965 

 farm numbers as the resource base is shown in Appendix Table 3. 



Both sets of area supply functions were summed to construct the 

 regional supply functions which now will be considered. 



Regional Supply Functions 



The area supply functions shown in Appendix Tables 2 and 3, if 

 added at the several prices, form two regional supply functions. These 

 regional supply functions reflect no area price differentials. However, 

 location differences of supply and consumption have given rise to a 

 pattern of regional farm prices which reflect milk transportation costs 

 from producer to consumer. By introducing this pattern of transporta- 

 tion difference using actual farm prices, two more regional supply 

 functions may be developed using the information in Appendix Tables 

 2 and 3. 



Regional Supply Functions with no Area Farm Price 

 Differentials and 1960 and 1965 Resource Bases 



The supply functions without price differentials between areas 

 were developed through simple summation of the 20 area supply fvmc- 

 tions. These summations assume that an equal farm price for milk 

 exists for the Northeast. The area supply functions were calculated by 

 using the resource bases of 1960 and 1965 (Table 8) . These supply func- 



Table 8. Northeast Regional Supply Function, 1960 and 1965 

 Resource Base, Without Area Price Differentials 



Price 



S2.80 

 3.20 

 3.60 

 4.00 

 4.20 



4.40 

 4.60 

 4.80 

 5.00 

 5.20 



5.40 

 5.60 

 5.80 

 6.00 

 6.20 



27 



