Answer to Question #184421 in Microeconomics for uzair malik

Question

In 2001 an outbreak of foot and mouth disease in Europe led to the burning of millions of cattle carcasses. What impact do you think this had on the supply of cattle hides, hides prices, the supply of leather goods, and the price of leather goods

Answer 1

The burning of millions of cattle carcasses causes a decrease in the supply of cattle hides in Europe. A decrease in supply caused by a change in factors other than price will shift the supply curve to the left and this will lead to an increase in the price of cattle hides in the country.

Cattle hides are used to make leather goods and therefore, a decrease in the supply of cattle hides will lead to a fall in the supply of leather goods.

With demand kept constant, a decrease in the supply of leather goods in the market will cause the supply curve to shift to the left leading to an increase in the price of leather goods.