ECON 1000A Assignment 1: Supply and Demand Analysis - Fall 2018

This economics assignment provides a detailed analysis of four different market scenarios using the principles of supply and demand. It examines the impact of new hen standards on egg prices, the decreasing consumption of fast foods, the effect of cheaper gas on suburban housing demand, and the rising cost of briskets on the Texas barbeque market. Each scenario includes an explanation of how the supply and demand curves are affected, the expected impact on equilibrium price and quantity, and illustrative diagrams. The analysis demonstrates how various factors influence market dynamics and consumer behavior, providing a comprehensive understanding of economic principles. Desklib offers a wide range of solved assignments and study tools to support students in their academic journey.

Running head: ECONOMICS ASSIGNMENT
Economics Assignment
Name of the Student
Name of the University
Author Note

1ECONOMICS ASSIGNMENT
Table of Contents
Answer 1....................................................................................................................................2
Answer 2....................................................................................................................................3
Answer 3....................................................................................................................................5
Answer 4....................................................................................................................................6
References..................................................................................................................................8

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Answer 1
In the beginning of new year (2015), new standards have been launched in Ohio, Iowa
and other places, according to which the farmers need to keep fewer hens in each of the cage
and also have to remodify their henhouses. These in turn, is expected to decrease the supply
of eggs and also increase in the cost incurred by the farmers (Frank & Cartwright, 2013).
Also, due to the new standards which require the farmers to keep less hens in one cage, in the
winter, the farmers also need to install heaters as a substitute of the heat which was
previously naturally generated as many hens used to live together (Cbsnews.com, 2018).
These factors, in turn are cumulatively expected to decrease the supply of eggs in the market
of California and also across the United States of America, the effects of the same being as
follows:
Figure 1: Demand supply dynamics for fall in supply of eggs
(Source: As created by the author)

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As the above figure shows, due to fall in the supply of eggs, across California and
parts of the USA (demand remaining the same), the price of eggs is expected to rise. The
price can also be seen to have already hiked and the increased exports to Mexico and Canada
has also contributed to the increase in the price hike, as can be seen from the following
figure:
Figure 2: Effects of increased exports to Mexico and Canada
(Source: As created by the author)
All these aspects are expected to increase the equilibrium price of eggs. However, the
quantity can decrease or increase depending upon the hike in the prices. If the price rise is
considerably high, new seller can enter the market, thereby increasing the quantity to some
extent. Otherwise, the quantity is expected to fall (Hall & Lieberman, 2012).

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Answer 2
According to the concerned article, in the recent period, the consumption of fast foods
has decreased considerably in the United States of America. The adult consumption of fast
food in their daily calorie intake, has dropped from 12.8% (2003-2006) to 11.3% (2007-
2010). The fast food calories among people with age above 60 years, in the country, can be
seen to have dropped to 6% only, irrespective of the genders (Today.com, 2018). This fall in
the fast food consumption can be attributed to the increased awareness generation among the
population of the country, regarding the hugely adverse impacts of fast food and also the
obesity epidemic, which can also be seen to be decreasing in the recent period. The impacts
of the fall in fast food consumption and increasing trend of opting healthier foods, on the fast
food industry is depicted by the diagram below:
Figure 3: Effects of fall in demand of fast foods
(Source: As created by the author)

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Fall in the demand for fast foods, is expected to reduce both the quantity and price of
the same, which in the long run is expected to decrease the supply of fast foods, as more and
more eateries and fast food chain are expected to launch and expand the low-calorie menus to
retain their customers (Rader, 2014).
Answer 3
The concerned article highlights that the price of gasoline in the United States of
America, has been falling in the recent period and the same fell for consecutively eleven
weeks, falling to as low as $2.55/gallon in 2014, which is lowest after 2009. The price of gas
in the country is also expected to decrease further in the coming years. This, as per the article,
is expected to influence the consumption and demand patterns of the people in the country,
including the residential market (Washingtonpost.com, 2018). When the gas price falls, the
people are expected to increase their demand and do not mind to travel greater distance. This
in turn, is expected to increase the demand for the housings in the suburb areas (whose prices
are generally lower than those houses in the urban and economic as well as commercial
zones), as the cost of commuting from these places fall with the fall in the price of gas. The
effects of the same, in the residential market, can be seen from the following figure:

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Figure 4: Increase in demand for suburb residences
(Source: As created by the author)
The fall in the gas price, is thus expected to increase the demand for the houses in the
suburbs of the country (Bauer, 2018). If the supply of the housings in these areas remain the
same, then the new equilibrium in this market is expected to occur at the point where both the
price as well as the number of houses bought are expected to be higher than the initial
equilibrium, as can be seen from the above figure.
Answer 4
The article taken into consideration, highlights the rising shortage of briskets in the
market in the recent period, due to a hike in the cost of beef. The price of briskets can be seen
to have increased by 60% in one year, from $2.21 to as high as $3.52 per pound. The reason
behind the same can be attributed to less availability of beef and increase in the price of the
same (Cbsnews.com, 2018). However, on the other hand, the demand for the same has been
increasing in the recent years, due to the increase in the popularity of Texas barbeques across
the nation and also due to the increase in the income of major section of the population in the
country and change in the lifestyle of the same.
The effects of the same on the market for Texas barbeque can be seen with the help of
the demand-supply framework, which is shown as follows:

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Figure 5: Condition in the Texas barbeque market
(Source: As created by the author)
The supply of Texas barbeque is decreasing with the hike in the price of the briskets.
On the other hand, the demand for the same is also increasing. This is supposed to increase
the price of the same in the recent period. However, the quantity consumed can decrease,
remain same or can even increase, depending upon the relative magnitude of the changes in
the supply and demand of the same, in the recent period (Blad & Keiding, 2014).

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References
Bauer, M. J. R. (2018). Principles of microeconomics.
Blad, M. C., & Keiding, H. (2014). Microeconomics: Institutions, equilibrium and
optimality (Vol. 30). Elsevier.
Cbsnews.com. (2018). Brisket shortage has Texas barbecue lovers facing rising costs.
Retrieved from https://www.cbsnews.com/news/brisket-shortage-has-texas-barbecue-
lovers-facing-rising-costs/
Cbsnews.com. (2018). Why egg prices will likely rise in 2015. Retrieved from
https://www.cbsnews.com/news/why-egg-prices-will-likely-rise-in-2015/
Frank, R., & Cartwright, E. (2013). Microeconomics and behaviour. McGraw Hill.
Hall, R. E., & Lieberman, M. (2012). Microeconomics: Principles and applications. Cengage
Learning.
Rader, T. (2014). Theory of microeconomics. Academic Press.
Today.com. (2018). Hold the fries: We're eating less fast food, study says. Retrieved from
https://www.today.com/health/hold-fries-were-eating-less-fast-food-study-says-
1C8463926
Washingtonpost.com. (2018). Cheap gas makes suburban houses more valuable. Retrieved
from https://www.washingtonpost.com/news/wonk/wp/2014/12/18/cheap-gas-makes-
suburban-houses-more-valuable/?noredirect=on&utm_term=.e223e1a1da87