You must show the (a) correct graphical analysis on the axes provided, and (b) then restate how you perceive the market equilibrium price and quantity will be affected, as indicated in your graphics.

SITUATION

A single case of mad cow disease was confirmed in northern Alberta, Canada, May 20^th of 2003.The U.S. and other trading partners immediately banned imports of Canadian live cattle and processed beef, resulting in huge losses for the Canadian beef industry and dropping Canadian beef market prices.Using demand or supply as appropriate illustrate first this situation (be sure the equilibrium price and quantity both decrease).Second, on the same grid, diagram the result of a supply-side policy action that might be taken by the Canadian government to remedy the problem of low beef prices.Diagram this also (and at least the equilibrium market price should increase after the government action is applied).

a)GRAPHICALANALYSIS

b)WRITTEN