Question

The opening of Mexico's beef imports is viewed with concern by US producers. At the same time that in the USA the pork supply would increase, the opening of exports of American production is slow (Just for the sake of this excercise)

• This situation will affect the pork and chicken meat market… graph and explain (in the graphic) what is expected to happen (price and quantity)

• The impact of importing a greater quantity of beef will cause unemployment in the labor market for pork and chicken (V / F)

Answer 1

we can see in the beef market there will be a fall in price (P1 to P2) and an increase in the quantity (Q1 to Q2)

as beef and pork are substitute goods, the fall in the price of beef would lead to less demand for pork and hence price for pork declines and also the supply of pork will also go up so the price will fall even down the total change in price is P3 to P4 and new equilibrium quantity of Pork cannot be said exactly where it will fall because demand is decreasing but supply is increasing but in the diagram, the change is shown to increase from Q3 to Q4.

the chicken is also a substitute for beef. hence fall in the price of beef would lead to falling in the demand for chicken and its equilibrium price will fall(P5 to P6) and quantity will also fall from (Q5 to Q6)

b. the impact of importing a greater quantity of beef will cause unemployment in the labour market for pork and chicken which is true because the reduction in price in both the markets will disincentivize the producers to employ more labour there.

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