Question

Is the price of chicken lower than the price of beef because beef is preferred over chicken (the demand factor), or because it is cheaper to produce chicken (the supply factor)? Is the cost of producing chicken lower than the cost of producing been because chicken is considered an inferior good?

Answer 1

Answer:
The price of chicken is lower than the beef because the cost of producing chicken is lower than the cost of producing beef. Few of the factors which lead to this conclusion is mentioned below:

• A chickentakes a lot less feed to create a pound of meat (around 3 pund per pound of meat) compare to beef which takes ( around 5-6 pounds of meat to produce 1 pound of meat).
• Less feed means lower cost of production and hence lower cost to the customer.
• Chicken have very short lifespan of few weeks to few months, on the other hand beef can take years to develop which increase the total investment being done on them.
• A chicken can be sold to 85-90% of their body weight apart from head, feet and featuhers on the other hand beef can be sold upto 70% of the body weight, remaining things need to be thrown out.
• The initial cost of setup of chicken farm is much less than that of a beef farm so they can reach breakeven point easily.

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