Answer to Question #126876 in Microeconomics for huma

Question

Assume that the market for fresh chicken is in equilibrium. Using suitable graphs indicate what will be the change in equilibrium price and quantity in response to the following determinants in the short run.


a) The price of chicken feed increases.

b) The consumers’ income increase and fresh chicken is normal good.

c) The price of frozen chicken decreases and it is a substitute in use for fresh chicken.

d) More farms start growing fresh chicken farms.

Answer 1

Assume that the market for fresh chicken is in equilibrium. Using suitable graphs indicates the change in equilibrium price and quantity in response to the following determinants in the short run:

a)     The price of chicken feed increases.  

If the price of the chicken feeds increases, the price of chicken will also increase.

b)     The consumers' income increase and fresh chicken is a common good.

If consumers' income increase and fresh chicken is a common good, there is a great likelihood that the price of the latter will increase.

c)     The price of frozen chicken decreases, and it is a substitute in use for fresh chicken.

If frozen chicken is the substitute for fresh chicken, and its prize decreases, there is a likelihood that the price of the fresh chicken will increase.

d)    More farms start growing fresh chicken farms.

In case that more farms begin growing the fresh chicken farms, the price of the latter will decrease, they will increase in quantity in the market.