During the first half of the 2000s, the price of pork rose. After that, within a couple of years the price fell back to about the level before the initial increase. What might have led to these events?
What will be an ideal response?
There are thousands upon thousands of hog farmers in the United States. In the first half of the 2000s, a general decrease in the demand for beef led to a large increase in the demand for pork. As a result of the increase in market demand, the price of pork increased dramatically. Hog farmers were getting a high price and making large economic profits.
In the long run, the word got out that economic profit was possible in this arena. Over time, more hog farmers entered the market, which led to a large increase in the supply of pork. As supply increased, the price of pork dropped.
Thus the higher price was the short-run result of an increase in demand. The falling price reflected the adjustment to the long-run equilibrium, as new hog farmers entered the market. The long run was ultimately reached and the price of pork was more or less the same as before the increase in demand.
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A. True B. False C. Uncertain
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A) intensively use labor input. B) intensively use capital input. C) use capital and labor in about equal proportions. D) use either labor or capital input, depending on the good.
Production indifference curves show the combination of inputs that produce a given output.
Answer the following statement true (T) or false (F)