Question
In: Economics
The US is Australia’s major export market for beef. Suppose that the mad cow disease hits...
The US is Australia’s major export market for beef. Suppose that the mad cow disease hits the US and causes a shortfall in US beef production. Using a three-panel diagram, explain the effect of the mad cow disease on the US’s and the world’s beef market. (Hint: Consider the US as a large country in this case). (10 pts.)
Solutions
Expert Solution
When the supply decreases, accompanied by no change in demand, there is a leftward shift of the supply curve. As supply decreases, a condition of excess demand is created at the old equilibrium level. Effectively there is increased competition among the buyers, which obviously leads to a rise in the price.
An increase in price is accompanied by a decrease in demand and an increase in supply. This continues until a new equilibrium level is attained. Further, there is a rise in equilibrium price but a fall in equilibrium quantity.
Rahul Sunny answered 2 years agoRelated Solutions
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What would an economist predict will happen to the demand curve of
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B.
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A large number of cattle are found to have mad cow disease and as a result,...
A large number of cattle are found to have mad cow disease and
as a result, consumer confidence in the safety of beef is shaken.
What would an economist predict will happen to the demand curve of
beef?
A.
Consumers will move to a point lower down the beef demand
curve.
B.
There will be an upward movement along the beef demand
curve.
C.
The beef demand curve will shift to the left.
D.
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Boss Labs, Inc. provides mad cow disease testing for both state and federal governmental agricultural agencies....
Boss Labs, Inc. provides mad cow disease testing for both state
and federal governmental agricultural agencies. Because the
company’s customers are governmental agencies, prices are strictly
regulated. Therefore, Boss Labs must constantly monitor and control
its testing costs. Shown below are the standard costs for a typical
test.
Direct materials (2 test tubes @ $1.70 per tube)
$3.40
Direct labor (1 hour @ $32 per hour)
32.00
Variable overhead (1 hour @ $7.00 per hour)
7.00
Fixed overhead (1 hour...
Hart Labs, Inc. provides mad cow disease testing for both state and federal governmental agricultural agencies....
Hart Labs, Inc. provides mad cow disease testing for both state
and federal governmental agricultural agencies. Because the
company’s customers are governmental agencies, prices are strictly
regulated. Therefore, Hart Labs must constantly monitor and control
its testing costs. Shown below are the standard costs for a typical
test. Direct materials (2 test tubes @ $1.50 per tube) $3.00 Direct
labor (1 hour @ $32 per hour) 32.00 Variable overhead (1 hour @
$6.00 per hour) 6.00 Fixed overhead (1 hour...
Hart Labs, Inc. provides mad cow disease testing for both state and federal governmental agricultural agencies....
Hart Labs, Inc. provides mad cow disease testing for both state
and federal governmental agricultural agencies. Because the
company’s customers are governmental agencies, prices are strictly
regulated. Therefore, Hart Labs must constantly monitor and control
its testing costs. Shown below are the standard costs for a typical
test.
Direct materials (2 test tubes @ $1.60 per tube)
$3.20
Direct labor (1 hour @ $32 per hour)
32.00
Variable overhead (1 hour @ $7.00 per hour)
7.00
Fixed overhead (1 hour...
Hart Labs, Inc. provides mad cow disease testing for both state and federal governmental agricultural agencies....
Hart Labs, Inc. provides mad cow disease testing for both state
and federal governmental agricultural agencies. Because the
company’s customers are governmental agencies, prices are strictly
regulated. Therefore, Hart Labs must constantly monitor and control
its testing costs. Shown below are the standard costs for a typical
test.
Direct materials (2 test tubes @ $1.00 per tube)
$2.00
Direct labor (1 hour @ $32 per hour)
32.00
Variable overhead (1 hour @ $6.00 per hour)
6.00
Fixed overhead (1 hour...
Hart Labs, Inc. provides mad cow disease testing for both state and federal governmental agricultural agencies....
Hart Labs, Inc. provides mad cow disease testing for both state
and federal governmental agricultural agencies. Because the
company’s customers are governmental agencies, prices are strictly
regulated. Therefore, Hart Labs must constantly monitor and control
its testing costs. Shown below are the standard costs for a typical
test.
Direct materials (2 test tubes @ $1.46 per tube)
$2.92
Direct labor (1 hour @ $24 per hour)
24.00
Variable overhead (1 hour @ $6 per hour)
6.00
Fixed overhead (1 hour...
Pace Labs, Inc. provides mad cow disease testing for both state and federal governmental agricultural agencies....
Pace Labs, Inc. provides mad cow disease testing for both state
and federal governmental agricultural agencies. Because the
company’s customers are governmental agencies, prices are strictly
regulated. Therefore, Pace Labs must constantly monitor and control
its testing costs. Shown below are the standard costs for a typical
test.
Direct materials (2.00 test
tubes @ $1.46 per tube)
$ 2.92
Direct labor (1.00 hour @ $24
per hour)
24
Variable overhead (1.00 hour @
$6 per hour)
6
Fixed overhead (1.00...
Problem 23-5A (Part Level Submission) Hart Labs, Inc. provides mad cow disease testing for both state...
Problem 23-5A (Part Level Submission) Hart Labs, Inc. provides
mad cow disease testing for both state and federal governmental
agricultural agencies. Because the company’s customers are
governmental agencies, prices are strictly regulated. Therefore,
Hart Labs must constantly monitor and control its testing costs.
Shown below are the standard costs for a typical test. Direct
materials (2 test tubes @ $1.00 per tube) $2.00 Direct labor (1
hour @ $30 per hour) 30.00 Variable overhead (1 hour @ $6.00 per
hour)...
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