MASS. EXPERIMENT STATION BULLETIN 365 



Table 3. — Monthly Range in Dealers' Product-Costs, 1935'' 

 (Dollars) 



Month Maximum Minimum Range 



♦Exclusive of Flat Plan. 



The standard deviation of dealers' product-costs from the average market 

 cost was ±17.2 cents for 1935. In other words, approximately two-thirds of 

 the dealers had costs within 17.2 cents of the market average. The limit within 

 which the bulk of the dealers' product-costs came was smallest in February 

 (±14.7 cents) and largest in June (±29.8 cents). 



Important relationships between the percentage of total deliveries going into 

 Class II usage and the variation in dealers product-costs in 1935 are brought 

 out by reference to figure 3. 



The normal expansion from February through June in the percentage of milk 

 disposed of as Class II was accompanied by a normal increase in the spread of 

 dealers' product-costs around the market average. The slight drop in Class II 

 usage from June to July was associated with a very pronounced contraction in 

 the range of prices. The continued decline in Class II disposal from July through 

 November was associated with an increase in the spread of dealers' product -costs 

 rather than with the expected decrease. 



The direction of the June-July movement would be regarded as normal. The 

 severity of the drop in the spread, however, warrants detailed explanation. 



A narrowing of the spread in product -costs may be caused by a number of 

 forces acting independently or together. There may be a relatively uniform 

 reduction in the proportion of milk disposed of as Class II by all dealers. There 

 may be a sharp decline in the Class II disposal of those dealers carrying the larger 

 proportions of it. There may be a marked increase in the proportion of Class II 

 disposal by those dealers handling relatively little. There may be a reduction 

 in the Class I-Class II price ratio. All of these forces were operating during the 

 June-July period 1935. 



