I90 THE MARKETING OF WHOLE MILK 



An increase to 13 cents per quart reduced the consumption 

 to about 584,000 quarts. This means, if the Department's 

 estimates were correct, that Chicago consumers were 

 actually paying out less for milk with the price at 13 cents 

 than they had spent when the price was 8 cents per quart. * 

 A similar experience was reported in Cleveland, where a 

 leading dealer claimed to have lost more by raising the 

 price from 9 to 10 cents per quart than he would have 

 lost had it remained at 9 cents. In this case the demand 

 did not come back to normal until the following spring. 

 On the other hand, when prices are again lowered, it is 

 often hard to bring consumption back to normal, because 

 of the fact that milk consumption is so largely a matter 

 of habit. 2 In Chicago, on the above mentioned occasion, 

 consumption remained about 16 per cent below normal 

 for some time after the price had been reduced to 12 cents.' 

 Just as an increase in the retail price will cause a falling 

 off in the consumption, so an increase in the price paid to 

 producers usually means an increased supply, unless 

 counteracting forces are also at work, such, for example, 

 as increases in costs or better opportunities along other 

 lines. When prices are unusually good, producers are 

 encouraged to increase supply. This they can do in sev- 



' Duncan, C. S., Jour. Pol. Econ., Apr., 1918, p. 333. 



' This at first thought appears to be a case where a rule did not work both 

 ways. That is, whereas an increase in the price of milk caused a decrease in the 

 demand, a decrease in the price did not in the same degree cause an increase in 

 consumption. What had probably happened was that milk prices had become 

 customary. Then when these customary prices were disturbed in a way un- 

 favorable to consumers, the latter became resentful, especially where their sense 

 of injury was fanned by public statements and press dispatches. On the other 

 hand, once a lower standard of consumption had become habitual, a fall in 

 price did not of itself at once jar people out of the new habits, and hence the 

 demand did not respond quickly to price cuts. 



• Davenport, E., Hoard's Dairyman, Mar. i, 1918, p. 234. 



