ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -It’s a fundamental economic principle that when supply exceeds demand for a good or service, prices fall. When demand exceeds supply, prices tend to rise. There is an inverse relationship between the supply and prices of goods and services when demand is unchanged.

Detailed explanation-2: -A change in the price of the good (in this case, chicken) cannot change the demand for chicken because each price is included in the table. A change in price will result in a change in the quantity people are willing to buy. Suppose the price changes from $3.00 per pound to $4.00 per pound.

Detailed explanation-3: -Faced with higher prices of chicken at the supermarket, more consumers will choose substitutes for chicken–and the demand for beef will increase. The resulting equilbrium price of beef will be higher; the equilbrium quantity of beef will be lower.

Detailed explanation-4: -Explain the effect that the slaughter of the cattle herds will have on the equilibrium price and quantity of chicken. As the price of beef decreases, consumers will buy more beef and less chicken. The demand for chicken will decrease, causing a decrease in the equilibrium price and quantity of chicken.