WHAT is the purpose of supermarkets cutting the price of shopping basket “essentials”, for instance bread and milk?
It is doubtful if what economists used to call “price elasticity of demand” has changed much.
At one time economists said demand for bread and milk was “inelastic” and reacted little to price changes.
Do we buy additional amounts of milk just because a shop knocks 1p off a litre?
However, taking 1p off the farm-gate price for a dairy farmer is serious. One North-east farmer milking 170 cows loses £14,000 revenue every time the milk price falls a penny.
At what cost to the economy and community if a 1p cut closes a farmer’s business?
Old Chapel Walk