Question 1 [15] During 2016 the consumption of poultry meat in South Africa was

Question

Question 1                                                                                                     [15]

During 2016 the consumption of poultry meat in South Africa was around 2 million tonnes. About 30% of the tonnes were imported mainly from Brazil and other countries. The poultry association of South Africa is planning to lobby effectively for a total ban of the imported poultry meat in the country. Briefly discuss the short-run impact on the key stakeholders below if their lobbying agenda were to be implemented? It is important to note that the price elasticity of poultry is less than 1 and the poultry industry is oligopolistic in nature.

The profit of local poultry producers                                                                 (5)

The demand for the feedstocks and day old chicks (major inputs)                       (5)

The social welfare of poultry consumers                                                            (5)

Explanation / Answer

Ans

A profit of local poultry producers will rise since domestic prices rise while as cost remains same

B Demand for these inputs will rise since domestic production rises

C welfare of poultry consumers fall since prices rise. Since elasticity is less than one, expenditure of consumers increase but what consumers get per unit of currency in real terms falls

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.