If the market for beef cattle was initially in equilibrium, an increase in the price of the feed grains used to fatten cattle would cause

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Quizplus · Accepted Answer

An increase in the price of feed grains would increase the cost of production for cattle farmers. As a result, some farmers will leave the market because they cannot afford to produce cattle at the higher costs. This will reduce the supply of beef cattle in the market, ultimately driving the price of beef upwards in the long run. This is because in the long run, farmers need time to adjust their production methods or move to other products altogether. Therefore, even if the demand for beef remains constant, the reduction in supply will push up the price.

If the Market for Beef Cattle Was Initially in Equilibrium