Question

1. True or False. [2 questions] 1. An article in the Wall Street Journal on Friday May 27, 2011 titled "The Return of Meatless Friday", discusses the sociological aspects of a recent announcement by the bishops of the catholic church in England and Wales. The bishops asked their parishioners to abstain from red meat every Friday for the entire year; not just during Lent. Some have claimed that if English and Welsh catholics reduce consumption of red meat by 5 tons every Friday, there would then be 5 tons more meat each week for others, including the poor, to eat. Assuming a typical upward sloping supply curve and downward sloping demand curve, over the long term, is the statement true or false? a. True b. False 2. With reference to question 1, if consumption of red meat is reduced, then over the long term, the price of red meat relative to other sources of protein, such as fish and poultry, will increase. a. True b. False

Answer 1

Solution:

1. Reduction in consumption of red meat by the catholics by 5 tons may not necessarily increase the consumption of the same by others. Main reason is there is no shortage of red meat, that reduction of its consumption by one part of consumers will be compensated for by the other part. So, if any non-catholic was not eating the meat already may as well choose not to consume it still.

Thus, the given statement is False.

2. With reduction in consumption of red meat, the demand curve shifts left. That reduces the price of red meat, making it relatively cheaper than other protien sources (and not expensive). Also, over the long term, at max the red meat price could get back to the initial one, keeping relative price same, but under no case will the relative price increase.

Thus, the given statement is False.