Market for Beef This Report

Market for Beef

This report analyzes what happens in the market for beef, chicken and leather when a new health report reveals that eating beef is just as healthy as eating chicken. It considers economic principles of short-term supply and demand dynamics which determine price and quantity sold in the market as well as how substitution and complement-in-production affect the supply and demand relationship.

If beef is just as healthy as eating chicken, consumers will demand more beef (assuming they had curtailed their demand because they had previously believed the product was bad for them). This will cause a shift in the demand curve for beef to the right along with a corresponding increase in price and quantity Q. sold of the product. The quantity supplied at each price is the same as before the demand shift because, unlike demand, supply is a factor of time.

In the short run, suppliers cannot always react to a change in demand or price. For instance, it might take cattle ranchers some time to adjust their inventory of cattle.

Beef is a substitute good for chicken, meaning beef can be consumed in place of chicken to meet dietary requirements for protein. This assumes that beef can be used to satisfy the same needs of consumers as chicken, i.e. that consumers will like to eat beef in place of chicken now that they believe it is safe to do so. This substitution of beef for chicken will cause a shift in the demand for chicken to the left along with a corresponding decrease in price and quantity Q. sold of the product. Once again, the quantity supplied of chicken does not change in the short run because supply is a factor of time, meaning that chicken farmers also need time to adjust their inventory.

Beef and leather are complements-in-production because they are simultaneously produced using the exact same resource, cattle. Thus, the production of one good automatically triggers the production of the other. As noted in the market for beef, the supply of beef does not respond to demand changes in the short run, thus the supply of leather is also not impacted. Likewise, the demand for leather is not impacted by the increase in the demand for beef because these goods serve different functions for the consumer and are, therefore, not related. It is worthy of note, that an increase in the price of beef will eventually cause an increase in the supply of leather because cattle ranchers will respond to the increase in demand for beef which automatically increases the supply of beef. But this is most likely to be a long-term occurrence rather than a short-term adjustment.