Economics: Opportunity Costs, Demand and Supply Analysis, Inelastic Demand, Price Control Effects, Average Cost and Marginal Curves

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1.Opportunity costs
Opportunity cost is the foregone alternative when one of the many alternatives is chosen
(Pettinger, 2017). An example of what I experienced last weekend when I had three events to
attend. The events were happening concurrently. The events were a networking opportunity
and a bithrday event. I attended the networking event .The opportunity cost was the fun and
friends I would have made if I attended the birthday party.
2.Demand and supply analysis.
a.When there is a sharp fall in average wages.
As beef is a normal good ,the law of supply and demand will result in decreased demand for
beef when there is a sharp decrease in average wages. The demand curve will shift
downwards to (Demand 2) . In this case the depressed demand is not due to price of beef
which has not changed (“3.1 Demand, Supply, and Equilibrium in Markets for Goods and
Services – Principles of Economics,” 2013). The initial equilibrium price (25) and quantity of
(4) will change and move downwards to 22,5 and quantity 3,5.
Figure 1
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Demand and Supply
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b.When farmers have access to high quality feed which has reduced the time it takes to take
the beef to the market.
This scenario creates excess capacity as farmers are producing more beef and also the beef is
now being readied for the market more faster than before. When there is excess supply the
prices have to go down so that the market can aborb the increased supply.

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Figure 2
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The effect of increased supply will create an excess supply which will force down prices to
match demand ("Changes in equilibrium price and quantity: the four-step process", 2019).
The shift in supply curve will see the equilibrium price and quantity move from 28 and 3,4 to
22 and 4,5.
c.When there is mass slaugher of cows and government advisory against beef consumption.
In this scenario we can have two outcomes
(i) the demand and supply curves will shift downwards.Equilibrium prices and quantities will
go down . Consumers will move to other alternative souces hence reducing demand .The
supply is also limited as beef is restricted to the market. The new equilibrium point is now
down from quantity 4,5 and price 25 to quantity 20 and price 4.