If the Price of Beef Rises Significantly

ane. If consumers look the cost of some good to rise side by side calendar week, then we more often than not observe the price of the expert rising this week. Explain this fact using a graph.

If the good is storable, and an increase in price is expected, consumers volition want to buy the good today, before the toll increases. As a consequence, the electric current demand for the skillful increases, which results in an increase in the cost of the practiced today. Run into graph.

ii. The drought in the plain states has made grain, and therefore feed, quite expensive. Many ranchers cannot afford to feed their cattle, and have sold much of their herd for slaughter.
a. What will be the firsthand upshot of this event on the equilibrium cost and quantity of beef? Illustrate using a supply and demand diagram.

Slaughtering the cows volition event in an increase in the supply of beef to the market, which will in turn atomic number 82 to a decrease in the equilibrium toll 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 effect that the slaughter of the cattle herds will take on the equilibrium cost and quantity of chicken.

As the price of beef decreases, consumers will buy more than beefiness and less chicken. The need for craven volition decrease, causing a decrease in the equilibrium toll and quantity of chicken. Run across graph.
Market place for chicken

c. Every bit it happens, the slaughter of beef cattle has coincided with a decrease in consumers' income. Bold that steak is a normal good while hamburgers are an inferior proficient, use a supply-and-need diagram for either market to illustrate the combined effect of the 2 aforementioned events on the equilibrium price and quantity of hamburgers and steak.

As consumers' income decreases, the demand for normal goods (such as steak) decreases while the demand for inferior goods (such as hamburgers) increases. Keep in listen that our conclusion from part a is all the same valid. A lower cost of beef will increase the supply of all appurtenances in which beef is an input. Therefore in each of the two markets in question nosotros deal with simultaneous shifts in supply and demand.

iii. Assume that the markets for saccharide cane, rum, and whiskey are initially in equilibrium. Assume further that Hurricane Marilyn destroys much of the Jamaican carbohydrate cane crop. Carbohydrate cane is a chief ingredient in rum, but information technology is not an ingredient in whiskey. Clarify the result of the hurricane on the markets for each of the three goods. Explain using graphs.

Step One - The market for sugar cane
The Hurricane results in a decrease in supply (at any given toll, sellers are no longer able to provide every bit much cane as they used to). Every bit a result, the equilibrium price of carbohydrate pikestaff will increase, and the equilibrium quantity will decrease. See graph.
Market for sugar cane

Pace 2 - The marketplace for rum
Sugar cane is a principal ingredient in rum, and information technology is now more expensive. An increase in the price of inputs causes a decrease in supply. Equally a result, the equilibrium cost of rum will increase, and the equilibrium quantity will decrease. The graph will exist similar to the one higher up.

Stride Three - The market for whiskey
It is reasonable to assume whiskey and rum are substitutes. Rum is at present more than expensive than it used to be (run into Step Ii). As a result, more consumers will buy whiskey instead. This will cause an increase in the demand for whiskey, which leads to higher equilibrium price and quantity of whiskey. See graph.
Market for whiskey

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Source: https://www.washburn.edu/sobu/dnizovtsev/200P03_SD2ans.html