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The Between Beef And Chicken Markets

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QUESTION 1 (3 MARKS)
REFER TO ATTACHMENT 1 ‘ANOTHER YEAR OF THE CHICKEN: U.S. BEEF SUPPLY WILL FALL AGAIN IN 2015’ AND ANSWER THE FOLLOWING QUESTIONS:
A) WHAT DOES THE ARTICLE SUGGEST ABOUT THE NATURE OF THE RELATIONSHIP BETWEEN THE BEEF AND CHICKEN MARKETS? (1 MARK)
The beef and chicken markets are competitive markets, as there are a large amount of buyers and sellers, which are price-takers. Beef and chicken are substitutes. As beef supply falls, beef prices will increase. As chicken prices are lower than beef prices, the demand for chicken would then increase.
B) USE SUPPLY AND DEMAND DIAGRAMS TO EXPLAIN AND ILLUSTRATE THE CHANGES THAT OCCURRED IN 2014 IN THE BEEF AND CHICKEN MARKETS? (2 MARKS)
BEEF MARKET

In the beef market,
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EXPLAIN AND ILLUSTRATE USING A SUPPLY AND DEMAND DIAGRAM. (2 MARKS)
Ticket scalping is when event tickets purchased from primary markets (such as box offices) are resold on secondary markets. Tickets are purchased at official prices set by ticketing agents (P), and then sold at higher prices, to those who are willing to buy it (Ps). Therefore, profits drive scalpers to initiate such activities, which leads to excess demand, and ultimately not allowing the market to clear.
When tickets (the official fixed amount, therefore having perfectly inelastic supply) is sold out, there is a shortage and excess demand is present, as Qd is more than Qs. Scalpers then increase their ticket selling price from P to Ps, reducing demand closer to Qs, until it reaches Qs=Ps.
B) EXPLAIN AND ILLUSTRATE THE EFFECT OF SCALPING ON THE CONSUMER SURPLUS AND PRODUCER SURPLUS. (2 MARKS)
Type of surplus Pre-scalping Post-scalping Change
Consumer surplus B+C B -C
Ticket office surplus A A -
Scalper surplus - C +C
Total surplus A+B+C A+B+C -
As seen from the surplus diagram above, scalping does not affect producer surplus (ticket office) and total surplus. This is because the supply curve is perfectly inelastic, which leads to scalpers gaining a surplus, as they are able to sell at a higher price than expected. This causes consumer surplus to decrease, as consumers have to pay more for scalpers’ tickets.
C) EXPLAIN WHY CONCERT VENUES MIGHT SELL TICKETS AT
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