The Impact of Disease Outbreaks on Chicken Farms on Chicken and Pork Markets

Analysis of the Likely Effects of Disease Outbreaks on Chicken Farms

Using general equilibrium analysis, and taking into account feedback effects, analyze the following: The likely effects of outbreaks of disease on chicken farms on the markets for chicken and pork.

The outbreak of disease on chicken farms will:

A. Increase the demand for chickens, raising the price of chicken, which will increase the demand for pork, a substitute, which will then increase the demand for chicken, further raising the price of chicken.

B. Decrease the supply of chickens, raising the price of chicken, which will decrease the demand for pork, a complement, which will then increase the demand for chicken, further raising chicken prices.

C. Decrease the supply of chickens, raising the price of chicken, which will increase the demand for pork, a complement, which will then increase the demand for chicken, further raising chicken prices.

D. Decrease the supply of chickens, raising the price of chicken, which will increase the demand for pork, a substitute, which will then decrease the demand for chicken, lowering chicken prices.

E. Decrease the supply of chickens, raising the price of chicken, which will increase the demand for pork, a substitute, which will then increase the demand for chicken, further raising chicken prices.

Decrease the supply of chickens, raising the price of chicken, which will increase the demand for pork, a substitute, which will then increase the demand for chicken, further raising chicken prices.

Explanation:

General equilibrium theory, or Walrasian general equilibrium, attempts to explain the functioning of the macro economy as a whole, rather than as collections of individual market phenomena.

The theory of balance assumes the economy to be an interdependent social network which aims to show that all free markets inevitably push towards the overall balance.

General balancing evaluates the economy in the long term instead of examining the independent markets as a study of partial equilibrium.

Request and demand are offset or equivalent in general equilibrium.

What is the likely impact of disease outbreaks on chicken farms on the markets for chicken and pork? Decrease the supply of chickens, raising the price of chicken, which will increase the demand for pork, a substitute, which will then increase the demand for chicken, further raising chicken prices.
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