A. On 10 June 2015 CNN Money reported that a bird flu outbreak resulted in 35 million of the more than 300 million egg-laying birds in the country being killed. The following questions explore the effects of this event on the market for eggs in a carton in grocery stores.
1. Which eggs demand and/or supply determinant(s) is/are affected?
2. What would be the effect, i.e., direction of change, on the demand and supply of eggs?
3. With a carefully labeled diagram (label axes, original and new curves, original and new equilibrium prices and quantities), illustrate the effects of this event on the market for eggs.
4. What will be the effects, i.e., direction of change, of this event, ceteris paribus, on the equilibrium price and quantity of eggs?
B. Given the direction of the change in the price of eggs indicated in answer to A #4 above, consider the effect of that price change on the market for items such as mayonnaise, salad dressing and cake mixes, for which eggs are a key ingredient.
1. Which demand and/or supply determinant(s) for these products is/are affected?
2. What would be the effect, i.e., direction of change, on the demand and supply of these products?
3. What would be the effects, i.e., direction of change, of this event, ceteris paribus, on the equilibrium price and quantity of these products?
4. What would be the effect of this event, ceteris paribus, on the profits of firms in these industries?
C. Given the direction of the change in the price of eggs indicated in answer to A #4 above, consider the effect of that price change on the market for bacon.
1. Which bacon demand and/or supply determinant(s) is/are affected?
2. What would be the effect on the demand and supply of bacon?
3. What would be the effects of this event, ceteris paribus, on the equilibrium price and quantity of bacon?
4. What would be the effect of this event, ceteris paribus, on the profits of firms in this industry? ]
D. Given the direction of the change in the price of eggs indicated in answer to A #4 above, consider the effect of that price change on the market for breakfast cereal.
1. Which cereal demand and/or supply determinant(s) is/are affected?
2. What would be the effect on the demand and supply of cereal?
3. What would be the effects of this event, ceteris paribus, on the equilibrium price and quantity of cereal?
4. What would be the effect of this event, ]ceteris paribus, on the profits of firms in the cereal industry?