Question

Goat meat producers are struggling to keep up with demand as consumers turn to alternative meats, and a dwindling supply due to the drought sees prices jump to record levels. Prices remain at $9-10 per kilo, after over-the-hook prices hit an all-time high of $10.30 per kilo carcase weight in May this year. Meat and Livestock Australia's Julie Petty said last time they saw a significant price spike was in 2017 at $7.50 but current prices were unprecedented. "For a producer, if you do have animals that are ready to be sent to market it's an excellent price to be receiving for these animals," Ms Petty said. However, she explained the drought and tough seasonal conditions forced many producers to destock their properties some time ago, which led to a reduced supply. "We are seeing increased strong demand on both the international and domestic market," she said. Goat Industry Council Australia's Campbell McPhee said, as the world market was screaming out for more of Australia's goat meat, he hoped it encouraged people to invest in the industry. "Domestically there has certainly been an increase of consumption of goat meat and people are looking for an alternative meat." Your task: Use the demand and supply model (including a diagram or diagrams) to support an explanation of why the price of goat meat has recently reached an all-time high according to this excerpt.

Answer 1

P2 ------ P1 - - - - - -- - - Q1 Q2

As we can infer from the text, the demand for goat meat increased drastically, majorly because of increase in demand for meat by consumer as well as investors who invested in goat meat market in order to reap benefits from their investment.

This led to increase in demand for goat meat, shifting demand curve to the right, leading to an increase in price of goat meat from P1 to P2 in graph above.