Question

News reports from the western United States occasionally report incidents of cattle ranchers slaughtering many newborn calves and burying them in mass graves rather than transporting them to markets. Assuming that this is rational behavior by profit-maximizing "firms," explain what economic factors may influence such behavior. Justify your answer. *150 words minimum ; don't copy/paste other responses

Answer 1

Factors of production means goods and services used to produce other goods and services. Mainly capital, labour,land is considered as an examples but still there are other factors such as geographical and climatic conditions can also affect production. If a firm applies profit maximization theory in this industry, it can put too much emphasis on profit and not on other aspects of business such as social economic well-being and the ultimate duty to the soceity and environment.  

In profit maximization , firm produces when the difference between marginal cost and revenue is maximum. In this case they give only importance to profits and in US condition is not much different. In US 320 million hectares are used for livestock grazing and it is heavily influenced by environmental conditions especially the draught . Absence of adequate rainfall, and emergence of food borne pathogens which lead to consumer perception of food quality affect the industry. This may lead a firm to apply this type of inhuman and rude behaviour to animals.

Shrinking of agricultural work force is also another cause of this type of act. 41%of the land area is federally owned and leased out to beef producers by government agencies and the policies of the changing government's can decrease the production . Applying profit maximization theory to this existing condition, the business behaviour of the firm will obviously worsen. In the process of applying profit maximization a firm will forget social responsibility.