Goat meat producers are struggling to keep up with demand as consumers turn toalternative meats, and a dwindling supply due to the drought sees prices jump to recordlevels.Prices remain at $9–10 per kilo, after over-the-hook prices hit an all-time high of $10.30 perkilo carcase weight in May this year.Meat and Livestock Australia's Julie Petty said last time they saw a significant price spike wasin 2017 at $7.50 but current prices were unprecedented."For a producer, if you do have animals that are ready to be sent to market it's an excellentprice to be receiving for these animals," Ms Petty said.However, she explained the drought and tough seasonal conditions forced many producersto destock their properties some time ago, which led to a reduced supply."We are seeing increased strong demand on both the international and domestic market,"she said.Goat Industry Council Australia's Campbell McPhee said, as the world market was screamingout for more of Australia's goat meat, he hoped it encouraged people to invest in theindustry."Domestically there has certainly been an increase of consumption of goat meat and peopleare looking for an alternative meat."Your task:Use the demand and supply model (including a diagram or diagrams) to support anexplanation of why the price of goat meat has recently reached an all-time high according tothis excerpt.

Question
Asked Mar 22, 2020
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Goat meat producers are struggling to keep up with demand as consumers turn to
alternative meats, and a dwindling supply due to the drought sees prices jump to record
levels.
Prices remain at $9–10 per kilo, after over-the-hook prices hit an all-time high of $10.30 per
kilo carcase weight in May this year.
Meat and Livestock Australia's Julie Petty said last time they saw a significant price spike was
in 2017 at $7.50 but current prices were unprecedented.
"For a producer, if you do have animals that are ready to be sent to market it's an excellent
price to be receiving for these animals," Ms Petty said.
However, she explained the drought and tough seasonal conditions forced many producers
to destock their properties some time ago, which led to a reduced supply.
"We are seeing increased strong demand on both the international and domestic market,"
she said.
Goat Industry Council Australia's Campbell McPhee said, as the world market was screaming
out for more of Australia's goat meat, he hoped it encouraged people to invest in the
industry.
"Domestically there has certainly been an increase of consumption of goat meat and people
are looking for an alternative meat."

Your task:
Use the demand and supply model (including a diagram or diagrams) to support an
explanation of why the price of goat meat has recently reached an all-time high according to
this excerpt.

check_circle

Expert Answer

Step 1

There are number of reasons which shows the cause of increase in the price of goat meat in recent scenario.

Drought condition leads to shortage of meat and causing fall in supply even though demand remains same.

Economics homework question answer, step 1, image 1

In the above graph, D shows the initial demand curve and S shows the initial supply curve. During 2017, we assume equilibrium at point E in the diagram and equilibrium price and quantity are $7.50 and Q, respectively. Drought cause a leftward shift in the supply curve to S1 and results into a disequilibrium by rising price to $9 and reducing quantity to Q1.

Step 2

Now, we know that drought is an emergency situation, so people start buying and storing commodities and also drought leads to less production of vegetables, so meats are an alternative. Therefore, even with the rise in price demand increases instead of falling.

Economics homework question answer, step 2, image 1

In the above graph the initial demand curve is D and initial supply curve is S. Now, we assume equilibrium during 2017 is at point E in the graph and equilibrium price and quantity are $7.50 and Q respectively. With the increase in demand, Demand curve D...

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