Poultry Market

A) Explain which kind of market form best describes the poultry market. That means investigating how the produce is transformed and traded from production to final consumption. What do the market characteristics mean for setting the prices and quantities?

The poultry market can be described by perfect competitive market. Poultry production is produced by large number of farms and other agriculture manufactures and it is sold by large number of traders. A product produced by one farmer is considered essentially equivalent to a product of the same grade produced by another. Farmers are thus price-takers. They can sell all they can produce at the market price, but they have no individual bargaining power to raise prices. There are also many consumers of this production, because almost all people and companies in food industry need poultry products. Poultry products are similar; they don’t have any special characteristics. Barriers of market entry don’t exist. Prices and quantities are determined by interaction of market demand and supply.

B) Show in a marked diagram how a 30% reduction in the poultry stock would affect the poultry market.

Because of 30% supply reduction prices would rise. The amount of price rising is determined by market demand and demand elastisity particularly.

C) Show in a market diagram what the relationship between the different markets could look like.

Rumours would cause the reduction of poultry consuming. Consumers would buy more pork and beef instead of poultry meet, in this case pork and beef would be substitutes of poultry. Increase of demand for pork and beef would lead to rising of their prices.

D) Show the minister what happens if he introduces a price ceiling on the markets for pork- and beef.

Price ceiling would cause shortage of production, deficit of pork and beef. For the price that the ceiling is set at, there is more demand than there is at the equilibrium price. There is also less supply than there...