Microeconomics Analysis of Fresh Milkyz Enterprise (ECO3101)

This report provides a microeconomic analysis of Fresh Milkyz Enterprise, a milk production company. It begins with an introduction to the company, its vision, mission, and product offerings. The core of the report focuses on microeconomic principles, including determining prices based on supply and demand, supported by tables and graphs illustrating demand and supply curves for different milk sizes. The analysis examines the concept of elasticity, measuring the sensitivity of demand to price changes. The report also explores the company's potential customer base and customer base, highlighting the importance of understanding market dynamics. The analysis includes a detailed discussion of demand, supply, and elasticity in relation to Fresh Milkyz Enterprise. It uses tables and graphs to illustrate the relationships between price and quantity demanded and supplied for both 250ml and 500ml milk products.

ECO3101
INTRODUCTION TO MICROECONOMICS
GROUP ASSIGNMENT
Fresh Milkyz Enterprise
Submitted to:
DR. ZURAINI ANANG
Submitted by:
GROUP: 14 (K4)
SEMESTER I SESI 2020/2021
BACHELOR OF MANANGEMENT(MARKETING) IN HONOUR
GROUP MEMBERS
NO. NAME MATRIC NUMBER
1. PUSPITA SREE A/P BALAKRISHNAN S60022
2. NUR ADLINA FARHANA BINTI YUSHIZA HAMLY S59866
3. CHONG YEE KEI S60018
4. AISHAH SYAFIQAH BINTI RADUAN S59992
5. FATIN AMIRA BINTI ROZAIMI S59939
TABLE OF CONTENTS
1

CONTENTS PAGE NO
1.0 INTRODUCTION 3-5
2.0 MICROECONOMICS ANALYSIS 6-20
3.0 CONCLUSION 21-22
REFERENCES 23
APPENDICES 24
1.0 INTRODUCTION
2

Fresh Milkyz product is a brand name under Uni-M Enterprise. This company was
founded in 2020 by a group of student University Malaysia Terengganu. Is an agriculture
company that provides milk to a consumer base in Malaysia. We decided to produce a milk
production because milk product is a product with various benefit. In the industry, they were
a lot type of milk like whole milk, low-fat milk, fat-free milk (skim milk), organic milk, lactose-
free milk, flavoured milk and raw milk. Uni-M Enterprise had decided to produce Semi-
skimmed milk and whole milk which is in high demand milk product in the industry. As our
name promises, Fresh Milkyz means dairy from our farms, delivered to the consumers as
freshly and naturally as possible. We believe that’s the way Fresh Milkyz should be just as
nature intended with no preservatives, colourings or any other foreign substances are added
into our products from the moment our cows are milked to the time it reaches to consumers.
We have started the company basic on the farmer’s market. Our headquarter are at
Semambu, Pahang.
This Fresh Milkyz Enterprise is one type of business organisation in Malaysia is
formation bound by the Registration of Business Act. Our company is an enterprise entity
which is a partnership. Uni-M Enterprise has more than one partnership involving in this
business entity which are Nur Adlina Farhana, Fatin Amira, Puspita Sree, Chong Yee Kei
and Aishah Syafiqah; together they created this Uni-M Enterprise with the brand name
product of Fresh Milkyz. We also believes that the key to the company’s success is
producing dairy products without chemical preservatives, colouring matter or
stabilisers.“Processed milk has a lot of added sugar, which causes obesity, diabetes and
other sicknesses. Formulated milk also causes children to become addicted to sugar. Thus,
we have opted for the traditional way and we’re going for natural products.
1.1 Vision
Our vision is to deliver quality, value and more satisfaction to our customer, employees and
communities that all our operation are run in a way that economically, socially and
environmentally sustainable.
1.2 Mission
Fresh Milkyz seeks to create and promote the great-tasting, healthier, organic beverage. We
strive to grow our business with the same honesty and integrity we use to craft our products,
with sustainability and great taste for all and to become the number one produce store in
main street by selling the highest quality , freshest farm produce, from farm to customer in
under 24 hours on 75% range and with 98% customer satisfaction.
LOGO
3

1.3 Description Of Product
All our products are made from fresh milk, contain no preservatives and colourings
and are freshly bottled before being transported to your local supermarket. We offer our
pasteurised, farm-fresh milk in full flavour and low-fat varieties. The economic resources our
company use is labour. We hired a few employees to get some physical and human effort
used in the process of production of the milks. The employees will take the milk from the
cows that we kept on our farm. It will be taken to the factory where we process the milk. We
also use other economic resources which is capital. We use our machinery as an asset to
help the process in the production of milk become faster. This is to make sure that we can
provide enough supply for the demand for milk in the consumer’s market. The machine is
used for pasteurisation of milk, packaging and labelling the product. By using these
economic resources in the production of our product which is milk, we can maintain the
supply of milk according to the demand needed in the market.
1.4 Potential Customer And Customer Base :
4

A market consists of all the potential customers sharing a particular need or want
who might be willing and able to engage in exchange to satisfy that need or want. Fresh
Milkyz has targeted its potential customer. Their potential customer will be at the age of 5 to
18 years old. This is because, at this age, they consume more quantity of milk for their
growth and health. They also drink flavoured drinks. Fresh Milkyz also produces milk in few
flavours so this will attract more attention for them to buy this product. We also targeted at
the age of 40 to 60 years old. This is because at this age they need to consume milk for their
bones to strengthen it. They also need to consume it daily. As a conclusion, the demand for
milk from this potential customer will be more.
The customer base is the group of customers who repeatedly purchase the goods or
services of a business. These customers are the main source of revenue for a company.
The customer base may be considered the business's target market, where customer
behaviours are well understood through market research or past experience. The Fresh
Milkyz product will be launch at supermarkets and the nearest store in the city and it also
can be located near the housing area. This is to make sure that the customer is able to find
and buy the products easily. This will increase the sales of milk. As a conclusion, the
targeted customer will find it easier to get the product at their nearest store.
2.0 MICROECONOMICS ANALYSIS
5

The microeconomic analysis attempts to explain the behaviour of individuals and
organizations in a given economy. Microeconomics fills this purpose by providing analysis on
a smaller scale. Simplified models and key definitions will help to understand
microeconomics. Microeconomics analysis can include production amount, number of
workers, necessary equipment, operation cost, revenue and more.
2.1 Determine The Price
Determining the price of milk is essentially a model where in prices for a concerned
good or service are determined within a given market. The prices of milk are determined
based on the balance of demand and supply in a market. While the demand related curve in
this particular bread production is set on the basis of consumers making an attempt to
enhance their utility on the basis of their budget, the supply related curve is determined by
entities making an attempt to increase profits, in view of bread production costs and the
intensity of demand of the bread manufactured by Fresh Milkyz Enterprise. In order to
increase profits, the price of milk related by designed on the basis of manufacturing quantity
of milk as per sale which the total revenue when deducted from total cost is maximum.
Following this, it is on the basis of supply and demand, within a market that helps in
determining who will be setting the prices goods. In a market that is competitive in the most
perfect way, like farming, entities have not many options but milk have to give acceptance to
the existing market prices due to many competitors, in case they really want to sell off their
products or goods. Supply and demand is an economic model of price determination in a
market. It concludes that in a competitive market, the unit price for a particular good will vary
until it settles at a point where the quantity demanded by consumers (at current price) will
equal the quantity supplied by producers (at current price), resulting in an economic
equilibrium of price and quantity.
2.1.1 Demand
6

As far as determining the price is concerned, economists are of the opinion that the
service or product price is one of the important factors that helps a consumer decided
whether consumers actually needs that product or not. However, they also believe that price
alone is not the determining factor. But according to a microeconomics principle, in case all
the other kinds of factors stand equal, when the price of bread rise, the demand for bread
will drop and if the price falls tn the demand rises. Thus, it is on the basis of determining the
price of milk that economists can predict with some amount of accuracy, about the milk that
consumers would purchase and the quantity of milk that they would buy. Table 1 and table 2
shows the price and quantity of milks demanded for 250ml and 500ml for 6 months
regarding to the survey from 127 responses of Fresh Milkyz Enterprise.
Price of milks (RM) Quantity of milks demanded (Unit)
0.00 2000
2.00 1750
4.00 1500
6.00 1250
8.00 1000
10.00 750
12.00 500
Table 1 : Shows the price and quantity of milks demand for (250ml)
Graf 1: Shows the demand curve for 250ml of milks
7
Quantity of milks (250ml)
12.00
10.00
8.00
6.00
4.00
2.00
0
Price (RM)
500 750 1000 1250 1500 1750 2000
Demand

Table 2 : Shows the price and quantity of milks demand for (500ml)
Graf 2 : Shows the demand curve for 500ml of
milks
2.1.2 Supply
8
Quantity of milks (500ml)500 1000 1500 2000 2500 3000 3500
12.00
10.00
8.00
6.00
4.00
2.00
0
Price (RM)
Demand
Price of milks (RM) Quantity of milks demanded (Unit)
0.00 3500
2.00 3000
4.00 2500
6.00 2000
8.00 1500
10.00 1000
12.00 500

The quantity of a milk that is supplied in the market depends not only on the price
obtainable for the product but also on potentially many other factors, such as the prices of
substitute products, the production technology, and the availability and cost of labour and
other factors of production. In basic economic analysis, analysing supply involves looking at
the relationship between various prices and the quantity potentially offered by producers at
each price, again holding constant all other factors that could influence the price. Those
price and quantity combinations may be plotted on a curve, known as a supply curve, with
price represented on the vertical axis and quantity represented on the horizontal axis. A
supply curve is usually upward-sloping, reflecting the willingness of producers to sell more of
the milk they produce in a market with higher prices. Any change in non-price factors would
cause a shift in the supply curve, whereas changes in the price of the milk can be traced
along a fixed supply curve. Table 1 and table 2 shows the price and quantity of milks that
Fresh Milkyz Enterprise supplies.
9
Price of milks (RM) Quantity of milks supplied (Unit)
0.00 500
2.00 750
4.00 1000
6.00 1250
8.00 1500
10.00 1750
12.00 2000

Table 3: Shows the price and quantity of milks supply for (250ml)
Graf 3 : Shows the supply curve for 250ml of milks
Table 4 : Shows the price and quantity of milks supply for (500 ml)
10
12.00
10.00
8.00
6.00
4.00
2.00
500 750 1000 1250 1500 1750 2000
Price (RM)
Quantity of milks
(250ml)
supply
Price of milks (RM) Quantity of milks supplied (Unit)
0.00 500
2.00 1000
4.00 1500
6.00 2000
8.00 2500
10.00 3000
12.00 3500

Graf 4 : Shows the supply curve for 500ml of milks
2.1.3 Elasticity
Elasticity is a measure of a variable's sensitivity to a change in another variable, most
commonly this sensitivity is the change in price relative to changes in other factors. In
business and economics, elasticity refers to the degree to which individuals, consumers or
producers change their demand or the amount supplied in response to price or income
changes. It is predominantly used to assess the change in consumer demand as a result of
a change in a good or service's price. Same goes to the production of milk.
Price of milks (250ml /500ml) Quantity of milks demanded (units)
11
12.00
10.00
8.00
6.00
4.00
2.00
0
Price (RM)
Quantity of milks (500ml)
500 1000 1500 2000 2500 3000 3500
supply

$0.00 2000 3500
$2.00 1750 300
$4.00 1500 2500
$6.00 1250 2000
$8.00 1000 1500
$10.00 750 1000
$12.00 500 500
2 1 2 1
2 1 2 1
( ) /[( ) / 2]
Price elasticity of demand = ( ) /[( ) / 2]
Q Q Q Q
P P P P
 
 
Ds = 1250 – 1500 / [1250 + 1500 / 2]
( 6 – 4) / [ 6 + 4 /2]
= - 250/2750/2
2/10/2
= - 0.05
0.1
= -0.5 (inelastic)
12
Price (RM)
Quantity of milks (500ml)
6.00
4.00
1250 1500