Answer to Question #84472 in Macroeconomics for Prashant Uprety

Question

Recently in Sweden, due to the discovery of bird flu the demand for live chicken decreased. This was, at the same time, followed by the Swedish government taking precautionary measures and culling 50 percent of the live chicken stock in the country. Using demand and supply graphs illustrate and explain the impact on price and quantity in the market for live chickens?

Answer 1

Due to the reduction of chicken supply in the Swedish market, the price of chicken increases. Reduction in chicken supply increases its demand. This aspect result in higher equilibrium in price due to the lower equilibrium quantity.