Answer to Question #147664 in Economics for Meli

Question

With one chicken farm in Cholesterolville and 10 chickens, Farmer can produce approximately four dozen eggs per week. (Each chicken lays live per week He selis one dozen eggs each to 10 families. Demand for these eggs will be high, causing the cost of the eggs to be high as well Eggs will be scarce . Now that the cost has gone up , what will happen to the Cholesterolville ? Why ? 2. What will this do to the supply of eggs? 3. How will this affect the cost of and demand for eggs ? 4. What will happen to the many chicken farms in Cholesterolville (the supply) as a result of the change in price ? 5. Explain why this is a circular cycle.

Answer 1

1) If the cost has gone up, then the price will increase and the quantity will decrease.

2) The local supply of eggs will decrease.

3) The cost and the demand will not change.

4) The market supply will increase according to the increase in price, and the previous quantity will be produced.

5) This is a circular cycle, because the market will go back to equilibrium after any change in either demand or supply.