POTENTIAL DEMAND FOR FLUID MILK
 IN FLORIDA MARKETS--1970


 Economic theory ascribes the characteristics of demand for a
commodity to five basic determinants. Two relate to price and the
remaining three to population characteristics in a given market at a
given time. Price factors are: current prices of available substi-
tute goods and expectations of future price levels. The elements of
demand associated with population include: numbers, income and tastes
or preference patterns.

 Ideally, demand projections would be based on a quantitative
measurement of the effect on demand for a commodity, in past and
present time periods, of each determinant. These values would then
be coupled with expected magnitudes of changes in each factor, over
a projected time period. The demand projection modeljS would then
approximate:

 Dx = (P + Py + Pn + P+ Pt) where:
 Dx = demand for good X,
 Px = price of X,
 Py = price of substitute goods,
 Pn = population numbers,
 P = per capital income, and
 Pt = population tastes and preferences.

 Results of past research dealing with price elasticity and cross-
elasticity of demand for the good would be employed to handle price
factors, i.e., increases or decreases in price of the commodity itself
and of substitute or complementary goods. Estimates of future population
numbers and income per capital would also be incorporated into the model.
This then would leave only the factor of changes in tastes and prefer-
ences to be measured and projected. For many classes of goods the vari-
ability in consumption preferences and tastes between buying units or
households and individual members of each unit would tend to confuse
any attempt to employ a single measure of taste and preference in a
predictive model.


 56/ The model would provide an estimate of a point on the demand
schedule, not the schedule itself.


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