Table 11. Point Elasticities Based on Linear E(iuations Derived from 

 Stepped Supply Function, 20 Northeast Areas, 1960 Resource Base, 



1965 Estimated Area Prices 



(quantity of milk at area price) (Sl.OO) 



Evaluation of Micro to Macro Research Procedure 

 for Estimating Supply Functions 



It is appropriate to make some evaluation of the synthetic estima- 

 tion of aggregate milk supply response. The 1965 Northeast milk pro- 

 duction was reported to be 25,371 million pounds (Table 2). The most 

 comparable milk output using the 1965 resource base with area milk 

 price differentials was computed to be about 32,000 million pounds 

 (Table 10). Some discrepancies between obser\^ed and computed 

 amounts were anticipated since the research procedure was not designed 

 to be predictive in the sense of defining what farmers would do. Rather, 

 the high level of estimated supply was due largely to the optimizing 



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