Agricultural Economics

Since the demand for Grain is derived from the quantity demanded for meat at all prices in this case. For every pound of meat that is not consumer, we might mistakenly assume that in the end 10 pounds of grain would be freed up. The decrease in the quantity demanded of meat effectively reduces the price of grain, which makes a cheaper input for some other users who take some of the new surplus into their production. The other side of this reduction is that actual decrease in the quantity demanded of beef at all prices reduce what the suppliers of grain perceive to be the market for their good. This causes some people to get out of the grain production and use their fields for other crops. Really, the only grain that will go to starving people will be the surpluses created in the short run while farms replant and adjust to the new derived demand for their product. (This discussion does not take into account any price support or other protection for the farmers. If those existed, the government might find it necessary to send the extra grain over to the needy countries to relieve their stockpiles.)


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