Answer to Question #196867 in Microeconomics for Tangy

Question

A survey by Namibian Statistic Agency (NSA) indicated that kapana is Namibians’ favourite. For each of the following, graphically indicate the possible effects on demand, supply, or both as well as equilibrium price and quantity of Kapana.

a) A severe drought in Namibia causes farmers to reduce the number of cattle in their herds by a third-quarter of their stock. These farmers supply beef that is used for kapana meat at Single Quarter Open Market. b) A new report by the Veterinary Council of Namibia reveals that kapana does, in fact, have significant health benefits c) The discovery of cheaper animal feed by Neudamm Bush-To-Feed that lowers the price of cattle. d) New technology that lowers cattle’s costs of producing

Answer 1

(a)The drought decreases the supply of meat as the equilibrium price rise and quantity reduces.

(b)The demand for kapana beef will increase and as a result equilibrium price will go up as quantity increases.

(c)

This will lead to increased supply of bread because of increased quantity of animals hence equilibrium price will reduce as quantity increases.

(d)The technology increases supply of castle hence the equilibrium price reduces as quantity increases.