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In the second place, even if ExceUo's milk prices reflect those in Batavia generally, in
claiming that milk prices are particularly "excessive" the author assumes that milk-sale profits
exceed profits from the sale of other goods in Batavia to a significant degree. But the author
provides no evidence to substantiate this assumption. Perhaps other prices have risen
commensurably, or perhaps even more on a percentage basis, during the same t/me period.
Moreover, perhaps profit margins from the sale of other goods are even greater than profits
from milk sales. In either event the author could not justifiably rely on the mere fact that milk
prices have increased by 100% to support the claim that milk sale profits are excessive.
In the third place, the author assumes that an increase in milk prices results in increased
profits. However, this is not necessarily the case. It is entirely possible that the costs
associated with producing and delivering milk have increased as well over the last ten years.
Thus the strength of the author's claim of excessive milk-sale profits depends on a cost-benefit
analysis that the author does not provide.
In the fourth place, based on the fact that the number of dairy farms has increased the
author infers that the supply of milk has also increased. However, this is not necessarily the
case. It is possible that dairy farm production has shifted away from milk to other dairy
products, and that the supply of milk has actually declined over this time period. To the extent
that this is the case, then the author's supply-and-demand argument that milk prices are
excessive is unconvincing.
Finally, in asserting that price regulation would help ensure an adequate supply of milk the
author overlooks the possibility that milk producers would respond to the regulation by
producing less milk, depending on the extent to which demand increases as a result of lower
milk prices. If regulation has the effect of lowering profits, then common sense tells me that
milk producers might be less inclined to produce milk. Without ruling out this possible scenario,
the author cannot convince me that the recommendation would help ensure an adequate
supply of milk.
In conclusion, the recommendation for regulation of milk prices is not well supported. To
convince me that the proposed regulation is needed to ensure a reasonably priced milk supply,
148
the author must provide clear statistical evidence that Excello's milk prices reflect nationwide
milk prices and that profits from milk sales are in fact excessive. To better evaluate the
recommendation, I would need more information about how the proposed regulation would
effect both the supply of milk and the demand for milk in Batavia.
Argument 10
The following appeared in a memo from the mayor of the town of West Egg.
"Two years ago, our consultants predicted that West Egg's landfill, which is used for garbage
disposal, would be completely filled within five years. During the past two years, however, town
residents have been recycling twice as much aluminum and paper as they did in previous
years. Next month the amount of material recycled should further increase, since charges for
garbage pickup will double. Furthermore, over ninety percent of the respondents to a recent
survey said that they would do more recycling in the future. Because of our residents' strong
commitment to recycling, the available space in our landfill should last for considerably longer
than predicted."
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