Abstract
This paper analyzes the changes in demand, supply, and equilibrium prices of two substitute products, beef and chicken. Chicken is a cheaper alternative, so customers often prefer it. Based on these preferences, consumer behavior is formed, which, in most cases, is the basis for determining demand for a product. At the same time, supply is based on the manufacturer’s ability to provide the quantity of products necessary to satisfy the audience’s needs.
The analysis revealed changes in product market dynamics. Chicken is a more popular product among buyers due to its lower cost. At the same time, beef prices are constantly increasing, which reduces the demand for the product among the audience. At the same time, the capabilities of suppliers of both goods have decreased significantly over the past year. The balance between the curves establishes an equilibrium, which is the optimal price for both parties. Therefore, this analysis assesses the relationship between these criteria using beef and chicken as examples.
Introduction
Demand, supply, and equilibrium price are interrelated indicators, the formation of which can be determined by various factors. In the case of animal products such as beef and chicken, these factors can be internal, such as changes in the prices of alternative products, or external, such as adverse weather conditions. External factors are much more difficult to control, so they often substantially influence the formation of demand and supply curves and prices.
Monitoring market trends, including buyer behavior and supplier performance, can help predict potential changes in product availability and cost. The development of product curves can demonstrate potential changes in equilibrium that will be affordable to consumers and beneficial to producers. Therefore, this paper analyzes these indicators for beef and chicken to establish their dynamics for the selected products.
Discussion
Demand
Various factors may affect beef demand. They include consumer preferences, income levels, the country’s economic conditions, and the cost of competing commodities such as poultry and pork (Wiener-Bronner, 2023). The higher a product’s cost, the less interest it attracts, as customers tend to choose cheaper alternatives. The articles reviewed note that beef is still quite expensive compared to other products in the category (Wiener-Bronner, 2023). It reduces demand for it among potential buyers (Figure 1).
The same factors drive demand for chicken as for beef. However, consumer preference and relative prices for this product show increased demand in the United States (Polansek, 2023). Alternatives like beef are more expensive, leading consumers to choose more affordable options. In this regard, the demand curve for this product may shift to the right, which demonstrates a potential increase (Figure 2).
Supply
Various circumstances shape supply capabilities. It may involve external and internal factors occurring directly in the industry (Shapiro et al., 2023). For example, the amount of beef supplied is influenced by the size of the cattle herd, weather conditions, and technological developments in the industry. Jared (2024) notes that in 2023, the total U.S. beef cattle inventory decreased by 3%, a figure that is critically low for this area. Consequently, supply opportunities for a given product have decreased, leading to changes in the curve (Figure 1).
Poultry supplies have also declined due to external factors that have reduced industry productivity. Unfavorable weather conditions, rising feed costs, and decreased production efficiency have reduced the quantity of goods provided to customers in 2023 (Polansek, 2023). Reducing the number of chicks and adjusting bird weight to limit production can shift the chicken supply curve (Figure 2). It shifts the balance between supply and demand, affecting the product’s price.
Changes in Equilibrium
Changes in the curves affect the formation of equilibrium prices and price ceilings, and floors. Reduced supplies increase commodity prices (Shapiro et al., 2023). However, this situation is relevant only when the customer’s interest in purchasing a product increases or remains unchanged. Beef prices are relatively high for most consumers, leading to decreased demand. Consequently, the equilibrium price may remain unchanged even as other market indicators decline simultaneously (Figure 1).
In the case of chicken, supplier capacity decreases while demand for the product increases. In this situation, the equilibrium will increase proportionately to the decrease in the quantity of supplied products (Figure 2). At the same time, price ceilings and floors should not be set below or above the equilibrium price since this may lead to shortages or surpluses of goods (Shapiro et al., 2023). It can cause negative financial consequences for suppliers and lead to unprofitable business.
Conclusion
Different circumstances influence the number of products that manufacturers can provide and customer preferences. Due to external factors, the supply capacity of both products tends to decrease. At the same time, the demand for both products shifts in different directions. Beef remains relatively expensive, so not all buyers can afford it. In this regard, consumer preferences are shifting toward cheaper alternatives, and demand for beef is decreasing.
On the other hand, chicken is a more affordable option, so consumers are more interested in purchasing it. These changes in curves have different consequences for the products. Beef prices may experience slight changes or remain unchanged as both market criteria are declining. However, decreased production potential and increased consumer interest may lead to higher chicken prices, which will continue to rise until industry productivity is restored.
References
Jared, G. (2024). Cattle producers saw price improvements in late 2023. Talk Business & Politics.
Polansek, T. (2023). Record chicken prices squeeze US shoppers, benefit Tyson Foods. Reuters.
Shapiro, D., MacDonald, D., & Greenlaw, S. A. (2023). Principles of microeconomics (3rd ed.). OpenStax.
Wiener-Bronner, D. (2023). Here’s why beef is still pricey. CNN Business.