Which of the Following Events Could Cause an Increase in the Supply of Beef Cattle
one. If consumers wait the price of some adept to rise next week, then nosotros generally notice the price of the good rising this week. Explain this fact using a graph.
If the good is storable, and an increase in price is expected, consumers will want to buy the good today, before the cost increases. Equally a issue, the current demand for the practiced increases, which results in an increase in the price of the good today. See graph.
2. The drought in the plain states has made grain, and therefore feed, quite expensive. Many ranchers cannot beget to feed their cattle, and have sold much of their herd for slaughter.
a. What will be the immediate effect of this event on the equilibrium price and quantity of beef? Illustrate using a supply and demand diagram.
Slaughtering the cows will result in an increase in the supply of beefiness to the market, which volition in turn pb to a decrease in the equilibrium price of beef and an increase in the equilibrium quantity of beef. See graph.
Market for beefiness
b. Chicken and beef are substitute goods. Illustrate the event that the slaughter of the cattle herds will accept on the equilibrium toll and quantity of craven.
As the toll of beef decreases, consumers will buy more beef and less chicken. The demand for chicken volition decrease, causing a decrease in the equilibrium price and quantity of chicken. See graph.
Market for chicken
c. As it happens, the slaughter of beefiness cattle has coincided with a decrease in consumers' income. Bold that steak is a normal good while hamburgers are an inferior practiced, use a supply-and-demand diagram for either market to illustrate the combined effect of the ii aforementioned events on the equilibrium price and quantity of hamburgers and steak.
Every bit consumers' income decreases, the demand for normal goods (such equally steak) decreases while the demand for inferior goods (such as hamburgers) increases. Keep in mind that our conclusion from part a is still valid. A lower price of beef volition increment the supply of all goods in which beefiness is an input. Therefore in each of the ii markets in question we deal with simultaneous shifts in supply and demand.
3. Assume that the markets for sugar cane, rum, and whiskey are initially in equilibrium. Presume further that Hurricane Marilyn destroys much of the Jamaican carbohydrate pikestaff crop. Sugar pikestaff is a principal ingredient in rum, only it is non an ingredient in whiskey. Analyze the effect of the hurricane on the markets for each of the three goods. Explain using graphs.
Pace One - The market place for sugar cane
The Hurricane results in a decrease in supply (at any given price, sellers are no longer able to provide as much cane as they used to). Every bit a result, the equilibrium price of sugar pikestaff volition increase, and the equilibrium quantity will decrease. See graph.
Marketplace for sugar cane
Pace Ii - The market for rum
Saccharide pikestaff is a principal ingredient in rum, and it is now more than expensive. An increase in the price of inputs causes a decrease in supply. As a result, the equilibrium cost of rum will increase, and the equilibrium quantity will decrease. The graph will be similar to the one above.
Pace Three - The market for whiskey
Information technology is reasonable to assume whiskey and rum are substitutes. Rum is now more expensive than it used to be (see Footstep 2). As a result, more consumers will buy whiskey instead. This volition cause an increase in the need for whiskey, which leads to higher equilibrium toll and quantity of whiskey. See graph.
Market for whiskey
Source: https://www.washburn.edu/sobu/dnizovtsev/200P03_SD2ans.html
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