AbstractLong‐run price elasticities of milk supply are decomposed into price elasticities of yield, herd size, and farm population. For northeastern U.S. dairy farms, these elasticities are shown to vary with farm size because of size‐related differences in capital intensity, specialization, yield and herd size variability, and rates of entry/exit into dairy. In the short run, price responsiveness is shown to decrease with farm size. In the long run, large farms are shown to be most price responsive. Results suggest that lower milk prices could make revenue distribution less equal in both the short and long run by altering output and population distributions.