Question
Feed barley used to fatten cattle is a large share of the cost of finishing a steer. In contrast, the value of the malt barley
Feed barley used to fatten cattle is a large share of the cost of finishing a steer. In contrast, the value of the malt barley used in the production of beer is worth less than the cost of the cardboard package. Whether the barley is used for malting or feed the transport cost is the same. Assume that the cost of transporting barley falls by half; both beef and beer can now be produced at lower prices.
(a) Draw and explain an appropriate economic model(s) that illustrate(s) the impact of falling factor prices (transport cost) on beer and beef prices.
(b) Explain the economics of the derived demand model and why the output of the two finished products is affected differently.
there is no data, it asked about a macroeconomy model.
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