Many people in the United States purchase beef on a regular basis. The amount as beef purchased in a given period depends on supply and demand. Demand is a curve that shows the amount of a product consumers are willing and able to purchase at different prices during a certain period of time (McConnell 2005). Six determinants of demand include
* Change in buyer tastes
* Change in number of buyers
* Change in income
* Change in the price of related goods
* Change in expectations
Supply is a curve that shows the amount of a product producers are willing and able to provide at different prices during a certain period of time (McConnell 2005). Six determinants of supply include
* Change in resource prices
* Change in technology
* Changes in taxes and subsidies
* Change in price of other goods
* Change in expectations
* Change in number of suppliers
Each of these determinants will affect the amount of beef purchased over a given period of time.
The news of a case of mad cow disease in the United States caused the price of beef to fall 20 percent almost over night (High beef prices 2004). Prices fell because such a higher quantity of beef was being supplied compared to the quantity of beef demanded. Less beef was demanded because of change in buyer expectations. Buyers did not know if the beef they were purchasing in the supermarket was safe, so they purchased less. Some consumers probably chose not to purchase beef at all. The number of buyers decreased, which caused the quantity demanded to decrease. Supply of beef to domestic markets was increased during this period. This increase was due to the export of U.S. beef to several countries being stopped. This could be considered a...