Beef is a normal good and people's incomes fall. At the same time a bumper corn crop reduces the cost of feeding steers. These changes result in

Question

Quizplus · Accepted Answer

When people's incomes fall, the demand for normal goods like beef decreases, shifting the demand curve to the left. At the same time, a bumper corn crop reduces the cost of feeding steers, increasing the supply of beef and shifting the supply curve to the right. The overall effect on the equilibrium quantity of beef depends on the relative magnitudes of these shifts. If the increase in supply (due to lower feeding costs) is larger than the decrease in demand (due to falling incomes), the equilibrium quantity of beef will increase.

Beef Is a Normal Good and People's Incomes Fall