Answer to Question #116413 in Microeconomics for Mateus Michael Ndinomwene

Question

4.) A survey by Namibian Statistic Agency (NSA) indicated that kapana is Namibians’
favourite. For each of the following, graphically indicate the possible effects on
demand, supply, or both as well as equilibrium price and quantity of Kapana.
a) A severe drought in Namibia causes farmers to reduce the number of cattle
in their herds by a third-quarter of their stock. These farmers supply beef
that is used for kapana meat at Single Quarter Open Market.
b) A new report by the Veterinary Council of Namibia reveals that kapana
does, in fact, have significant health benefits.
c) The discovery of cheaper animal feed by Neudamm Bush-To-Feed that
lowers the price of cattle.
d) New technology that lowers cattle’s costs of producing.

Answer 1

a) The supply of meat decreases as the beef cattle are limited and demand for meat increases which result in rise in equilibrium price of meat and a reduction in quantity.

b)The demand for kapana increases which result in large supplies. As a result of large supplies the equilibrium price decreases and quantity of kapana is increased.

c)This increases the demand of cattle which the result in rise in supplies. The equilibrium price of cattle then decreases as the quantity of cattle is high.

d) The technology increase the demand of cattle and hence the supply. The equilibrium price hence decreases as a result of high quantity.