Question

Thursday Thanks Jordan. Feed grain is an interesting market because it is pretty much entirely an "input" market. The only reason to buy feed grain is because you are going to "feed" it to something- -and nearly always that is going to be something that is being raised to be eaten--like cattle (at least I am assuming that cattle would be one use, any ag- experts are welcome to "school" me on this one!). That said, if the price of feed grain increases, what would happen in the cattle market? Ideas? Another interesting part of your article is that production AND price is increasing in the feed grain market. What does that tell us about what is going on with S and D? Dr. John

Answer 1

If the price of freed grain increases, the price of whole cattle will also increase because feeding food can not be substituted. And here, as it act as the cost of production, it will increase the overall price of cattle.

This tell us that, as the price of food increased the demand for it also increased for some reason that may be :-

1) increase in the numbers of cattle

2) increase in the demand of cattle.