Unit 3 Discussion Board
Chicken is a popular food in my home because everyone likes it. However, akin to other commodities, various factors of the demand and supply law influence this meal’s presence on our menu. Accordingly, there are times when the family can eat more chicken or more frequently. Conversely, there would also be moments when there would be less of it or infrequently.
Factors That Cause Shifts in Chicken Demand Curve
Among the main factors that cause shifts in chicken, demand curve includes (i) income, (ii) consumer trends, and (iii) substitutes’ prices (Jain, 2020).
Income
When income levels are high, the family eats more chicken and frequently under same prices, but when the salaries are low, we eat less meat and only occasionally even when there are no changes in chicken prices.
Consumer trends
During the mad cow scare, the family completely replaced beef with chicken. The family ate more chicken and less meat, even when there were no changes to their prices.
Substitutes’ Prices
When fish prices rise, the family eats more chicken and frequently under same prices, but when fish prices drop, we eat less chicken and more fish the two are almost complete substitutes of each other in our home.
Factors That Cause Shifts in Chicken Supply Curve
They include fiscal policy, changes in production factor’s prices, and monopolies (Mankiw, 2021).
Fiscal Policy
Higher duties on chicken and their related products would reduce chicken supply while lower duties would increase it.
Changes in production factor’s prices
High costs of chicken raising factors such as food and medication may reduce their supply while low costs may increase their supplied volumes.
Monopoly
If the chicken industry reshapes into a monopoly, the monopolistic firm can increase or reduce the supply.
Effects on Equilibrium Price and Quantity of Each Factor
Factors that lead to increases in demand shift the demand curve to the right. Simultaneously, the trend increases the equilibrium price (Mankiw, 2021). In the chicken case, these factors include higher income levels, consumer trends favouring high chicken consumption, and higher substitutes’ prices. All these factors would increase chicken consumption (quantity demanded) in the family, thereby shifting the demand curve to the right and occasioning into a new equilibrium price.
On the contrary, factors that occasion demand falls shift the demand to the left (Jain, 2020). In return, the equilibrium price falls. The components comprise lower income levels, consumer trends against high chicken consumption, and low substitutes’ prices. All these factors would lead to a fall in chicken demand.
Factors that lead to increases in supply shift the supply curve to the right. The equilibrium price then falls occasioning an increase in the quantity demanded (Mankiw, 2021). In the chicken case, these factors include favourable chicken raring and production policies, low chicken prices raising factors such as food and medication, and monopoly decisions to increase chicken supply.
Conversely, Jain (2020) illustrates that factors that decrease supply shift the supply curve to the left. The equilibrium price increases followed by a fall in quantity demanded. The factors comprise fiscal policy against chicken, higher chicken production prices, and monopoly decisions to reduce chicken supply.
Differences between Shifts in Demand and Supply and Movements along the Demand Curve Supply Curves
The main difference between the two is that movement happens when there is a change in quantity supplied occasioned exclusively by a change in price, and vice versa. On the other hand, shifts in a demand and supply curve occur when there are changes in the quantity demanded or supplied even when the price is constant (Jain, 2020). Understanding this distinction is crucial because it lays the foundation for understanding the causes of falls in products’ demand and supply falls.
References
Mankiw, N. (2021). Principles of microeconomics. Retrieved February 01, 2021, from https://www.cengagebrain.co.uk/shop/isbn/97803571335833
Jain, E. (2020, January 01). Impact of Law of Demand & Supply on Stock Market: A Study of Most Active BSE Indices with the Help of RSI: Semantic Scholar. Retrieved February 01, 2021, from https://www.semanticscholar.org/paper/Impact-of-Law-of-Demand-%26-Supply-on-Stock-Market%3A-A-Jain/48717a0b141c2ff2871128fc4fc32cd77470a300