1. The dairy industry in New Zealand uses a co-operative structure in which individual dairy farmers deliver its milk to a centralized firm who processes milk and exports it . What are the inputs required to be a dairy farmer? What are the inputs required to be a milk producer?
2. Assuming this co-operative structure minimizes the cost of milk production, what does this imply about the fixed and variable costs of raising cattle and the fixed and variable costs of processing milk? Draw a graph showing Marginal Cost, Average Total Cost, Average Fixed Costs, and Average Variable Costs of dairy farmers and milk processors.