THE DOMESTIC MARKET. US POPULATION FACTORS THAT INFLUENCE DOMESTIC DEMAND A LOOK AT LIVESTOCK...
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THE DOMESTIC MARKET
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Transcript of THE DOMESTIC MARKET. US POPULATION FACTORS THAT INFLUENCE DOMESTIC DEMAND A LOOK AT LIVESTOCK...
THE DOMESTIC MARKET
US POPULATION
United States Population
100.0
150.0
200.0
250.0
300.0
350.0
Year
Mil
FACTORS THAT INFLUENCE DOMESTIC DEMAND
A LOOK AT LIVESTOCK PRODUCTS
Shifts in ConsumptionShifts in Consumptionfor Meatfor Meat
WHAT HAS IMPACTED U.S. MEAT CONSUMPTION
CONSUMER TASTES AND PREFERENCES
WHAT HAS IMPACTED U.S. MEAT CONSUMPTION
CONSUMER TASTES AND PREFERENCES
–HEALTH (LOW FAT POULTRY)
WHAT HAS IMPACTED U.S. MEAT CONSUMPTION
CONSUMER TASTES AND PREFERENCES
–HEALTH (LOW FAT POULTRY)DEMOGRAPHICS
WHAT HAS IMPACTED U.S. MEAT CONSUMPTION
CONSUMER TASTES AND PREFERENCES
–HEALTH (LOW FAT POULTRY)DEMOGRAPHICS
–AGE
WHAT HAS IMPACTED U.S. MEAT CONSUMPTION
CONSUMER TASTES AND PREFERENCES
–HEALTH (LOW FAT POULTRY)DEMOGRAPHICS
–AGE–RACE AND ETHNIC BACKGROUND
“However, dietary choices of people of various ethnic groups living in the United States continue to be influenced by the traditional food practices and/or religious customs. For example, many Asian Americans still eat a diet similar to traditional Asian diets, which include large amounts of rice accompanied by vegetables, soy products, fish and meat. Many Hispanic Americans continue to eat a diet based primarily on beans, rice, and corn tortillas, seasoned with chili peppers and accompanied by beef, pork and chicken and small amounts of dairy products.”
WHAT HAS IMPACTED U.S. MEAT CONSUMPTION
CONSUMER TASTES AND PREFERENCES
–HEALTH (LOW FAT POULTRY)DEMOGRAPHICS
–AGE–RACE AND ETHNIC BACKGROUND–CHANGE IN HOUSEHOLD STRUCTURE
WHAT HAS IMPACTED U.S. MEAT CONSUMPTION
CONSUMER TASTES AND PREFERENCES
–HEALTH (LOW FAT POULTRY)DEMOGRAPHICS
–AGE–RACE AND ETHNIC BACKGROUND–CHANGE IN HOUSEHOLD STRUCTURE–INCOME SHIFTS
WHAT HAS IMPACTED U.S. MEAT CONSUMPTION
CONSUMER TASTES AND PREFERENCES
–HEALTH (LOW FAT POULTRY)DEMOGRAPHICS
–AGE–RACE AND ETHNIC BACKGROUND–CHANGE IN HOUSEHOLD STRUCTURE–INCOME SHIFTS–NEED FOR CONVENIENCE
The Demand for a Product
the Law of Demand
as prices go up -- quantity demanded goes down (all other things remaining unchanged)
Demand Schedule
Price Quantity$1.00 1000$2.00 900$3.00 800$4.00 700
Demand Curve
price
quantity
a
b
Why downward sloping?
Physical SatiationSubstitution effectIncome effect
ELASTICITY OF DEMAND
THE RESPONSIVENESS CONSUMERS ARE TO A
CHANGE IN PRICE
ELASTICITY OF DEMAND
% CHANGE IN QUANTITY DEMANDED
/% CHANGE IN PRICE
• ELASTICITY OF DEMAND
IN THE CASE OF THE PRICE ELASTICITY OF DEMAND THIS IS A NEGATIVE NUMBER
ELASTICITY OF DEMAND
ELASTIC VS INELASTIC
ELASTICITY OF DEMANDPRICE
QUANTITY
DEMAND
VERY INELASTIC
ELASTICITY OF DEMANDPRICE
QUANTITY
DEMAND
ELASTIC
ELASTICITY OF DEMAND
NECESSITY VS NON-NECESSITY
NECESSITY VS NON-NECESSITY
% OF INCOME SPENT ON A GOOD
ELASTICITY OF DEMAND
HOW NARROWLY THE PRODUCT IS DEFINED
Equilibrium
price
quantity
demand
supply
p
DEMAND SHIFTERS
PRICE
QUANTITY
S
D1D2
DEMAND SHIFTERS
DEMAND SHIFTERS
SHIFTS IN POPULATION
DEMAND SHIFTERS
SHIFTS IN POPULATION SHIFTS IN INCOME
INCOME AND CHANGES IN CONSUMPTION --- CAN BE POSITIVE (A NORMAL GOOD) OR NEGATIVE (INFERIOR GOOD)
A NORMAL GOOD:
INCOME GOES UP --- CONSUMPTION INCREASES
INCOME GOES DOWN -- CONSUMPTION GOES DOWN
INFERIOR GOOD :
INCOME GOES UP -- CONSUMPTION DECLINES
INCOME GOES DOWN -- CONSUMPTION INCREASES
Income Elasticity
% Change in Expenditure/
% Change in Income
Income Elasticity
Can be negative (inferior) or positive (normal)
DEMAND SHIFTERS
SHIFTS IN POPULATION SHIFTS IN INCOME SHIFTS IN THE PRICE OF COMPETING PRODUCTS
GOODS MAY BE SUBSTITUTES OR COMPLEMENTARY OR INDEPENDENT
SUBSTITUTE GOODS WOULD BE LIKE COFFEE AND TEA
IF THE PRICE OF COFFEE INCREASES THE DEMAND FOR TEA WOULD SHIFT OUT.
COMPLEMENTARY GOODS ARE GOODS THAT ARE CONSUMED TOGETHER -- LIKE BACON AND EGGS.
IF THE PRICE OF BACON INCREASES THE DEMAND FOR EGGS MAY SHIFT INWARDS.
INDEPENDENT GOODS HAVE NO APPARENT RELATIONSHIP. A PRICE CHANGE IN ONE HAS NO IMPACT ON THE DEMAND FOR THE OTHER.
Cross Price Elasticity
% Change in Consumption of Good B
/% Change in Price of Good A
Cross Price Elasticity
Can be positive or negative.
Cross Price Elasticity
A positive elasticity would indicate a substitute relationship.
Price of Beef
Quantity of Pork
Cross Price Elasticity
A negative elasticity would indicate a complementary
relationship.
Price of Bacon
Quantity of Eggs
DEMAND SHIFTERS
SHIFTS IN POPULATION SHIFTS IN INCOME SHIFTS IN THE PRICE OF COMPETING PRODUCTS
SHIFTS IN CONSUMER TASTES AND PREFERENCES
A FROST IN FLORIDA AND THE PRICE OF ORANGE JUICE GOES UP -- DEMAND FOR ORANGE JUICE?
price
quantity
S
D1
p1
p2
PRICE OF ORANGE JUICE GOES UP -- DEMAND FOR ORANGE JUICE?
MAD COW DISEASE OUT BREAK IN THE UNITED STATES -- DEMAND FOR BEEF?
price
quantity
S
D1
D2
p1
p2
MAD COW DISEASE OUT BREAK IN THE UNITED STATES -- DEMAND FOR BEEF?
MAD COW DISEASE OUT BREAK IN THE UNITED STATES -- DEMAND FOR CHICKEN?
price
quantity
S
D1
D2
p1
p2
MAD COW DISEASE OUT BREAK IN THE UNITED STATES -- DEMAND FOR CHICKEN?
price
quantity
S
D1
D2
p1
p2
MAD COW DISEASE OUT BREAK IN THE UNITED STATES -- DEMAND FOR CHICKEN?
HIGHER UNEMPLOYMENT ... POSSIBLE RECESSION -- DEMAND FOR BEEF?
price
quantity
S
D1
D2
p1
p2
HIGHER UNEMPLOYMENT ... POSSIBLE RECESSION -- DEMAND FOR BEEF?
RED WINE FOUND TO REDUCE CANCER RISK -- DEMAND FOR WINE?
price
quantity
S
D1
D2
p1
p2
RED WINE FOUND TO REDUCE CANCER RISK -- DEMAND FOR WINE?
PRICE OF CHICKEN DECREASES -- DEMAND FOR PORK?
price
quantity
S
D1
D2
p1
p2
PRICE OF CHICKEN DECREASES -- DEMAND FOR PORK?
Where we eat our food.Total Expenditures
on Food
0
50
100
150
200
250
300
350
400
450
1970 1975 1980 1985 1990 1995 1997
Year
Bil
lio
n $
At Home
Away from Home
