Demand Supply and Equilibrium Price for two Substitute Products

Demand and supply effectively display the behavior of the consumers in the market when there
are changes in some externalities. The two main changes are on the price and quantity is
supplied, which can equally be impacted by other factors such as government policies and time
of the years. For instance, the demand for some commodities, especially foodstuff, is likely to be
high during the holidays than at any other time of the year. The discussion focuses on meat and
chicken as the main products affected by demand and supply in the marketplace. More so, they
are substitute commodities implying that one can be used in place of the other, especially in
situations where there is scarcity. The law of demand and supply considers price the main acting
force (Thaler, 2020). When there is a price increase, the quantity demanded is likely to decline
while the supply will rise. However, that is not the case for all the fundamental needs, such as
food.
Keywords: Price, Demand, Supply, Equilibrium, Policies, Substitute, Commodity

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Discussion

Demand Supply and Equilibrium Price for two Substitute Products

Demand for Chicken

There is an increase in the quantity of chicken demanded in the Australian market. On
average, Australians consume 47kgs of chicken each in one year, which has recently decreased.
One of the key determinants of demand is employment (Butler and Hannam, 2022). There has
been a decline in the number of employees working in Australia’s biggest supplier due to the
Omicron virus. More so, there is an upward shift in the demand curve. There is the law of
demand in the chicken market where the quantity increases, leading to a rise in the prices due to
the scarcity of the commodity (Thaler, 2020). The Omicron variant has made chicken
unavailable in the Australian market leading to a higher level of utility, resulting in increased
demand in quantity.

Demand for Meat

The quantity demanded meat in the Australian market increases mainly because of the
Christmas festive season. While there is an increase in the quantity demanded, the prices are
equally on the rise (Kelly, 2021). A primary determinant of meat demand in the market is time
and duration. The rise is experienced in the festive season, where meat is needed in large
quantities. The price at the moment is not a key consideration because of impulse buying
(Thaler, 2020). Therefore, the law of demand has been foregone in this situation. It is expected
that the demand will decline when there is an increase in prices, but that is not the case for the
meat product in the Australian market. Hence, the demand curve is shifting upwards to the right.

Supply of Chicken

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While the quantity of chicken demanded in the Australian market is rising, there is a
decline in the quantity supplied. According to Butler and Hannam (2022), the limited staffing has
made it impossible to meet the consumers increasing demand, and the supermarket shelves are
empty. A key determinant of the supply is the price of the chicken. The product is the cheapest in
the Australian market, going for $5.43 per kilo (Butler and Hannam, 2022). However, with a
disruption of the supply chain by the Omicron virus, there is an increase in the price due to the
logistics of transportation. It has become an unaffordable commodity in the few places available.
The supply curve of the commodity will ship upwards (Liviu and Claudia, 2011). The law of
supply is applicable in the market since there is a decline in quantity.

Supply of Meat

The quantity of meat being supplied in the Australian market is declining. The issue
arises from the imposed COVID-19 restriction putting pressure on the local slaughterhouses in
the country. Therefore, government restrictions and regulations are the main factors affecting the
quantity of meat supplied to consumers (Kelly, 2021). There is less importation of meat, leading
to an overreliance on the domestic supply chain, which is insufficient to meet the rising demand.
A decrease in the quantity of meat being supplied makes the supply curve shift to the left despite
increasing the price.

Change in Equilibrium Quantity and Equilibrium Price for Meat
The meat product is making the equilibrium shift upward. The outcomes result from a
decrease in the quantity supplied, leading to a shortage that requires an increase in demand.
There is the unavailability of the commodity in the market space while individuals are strongly
gaining the desire for consumption. The price of meat will increase from the new equilibrium
while the quantity is substantially increasing (Kelly, 2021). The newly created amount of meat as

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depicted by the increasing quantity aims and meeting the increasing demand from the rise in
prices. The end goal is to have an equilibrium that will set the new prices and quantity at a
stalemate to balance the Australian market.

Change in Equilibrium Quantity and Equilibrium Price for Chicken
Equilibrium is a point where the supply and demand curve meet. When there is an
increase in the quantity demanded and a decline in the quantity supplied. The equilibrium price
will shift upwards. There is a new demand line to the right while a new supply curve will move
upwards to the left. The new demand and supply curve will create a new equilibrium point. The
new price will be higher, and the quantity being supplied will equally be on the rise. The balance
between the two aims to resolve the issue of scarcity and meet the consumers’ needs while
satisfying their utility level.

Conclusion

In conclusion, meat and chicken are substitute products, as depicted in the discussion
above. Despite each product acting independently on the equilibrium, a decrease in one leads to
an increase in the other. For instance, there is a decrease in the number of chicken supplies in the
Australian market while the demand is rising. The situation has increased the demand for meat
since it can easily substitute chicken. Some of the factors that have been key in affecting the
supply and demand for the two commodities include regulations from the government, especially
during the COVID-19 pandemic. The prominent disruption is on the supply chain affecting the
delivery of commodities.

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References

Butler, B. & Hannam, P. (2022). Chicken out of stock: Meat in short supply on Australian
supermarket shelves and at KFC. The Guardian. https://www.theguardian.com/australia-
news/2022/jan/11/chicken-stock-omicron-shortages-australian-staple-off-supermarket-
shelves.
Kelly, G. (2021). Australian meat industry warns of Christmas price rises due to Covid crisis.
The Guardian. https://www.theguardian.com/australia-news/2021/oct/10/australian-meat-
industry-warns-of-christmas-price-rises-due-to-covid-crisis.
Liviu, N., & Claudia, A. (2011). The role of supply and demand analysis in substantiating the
company business policy. African Journal of Business Management, 5(22), 9180-9190.
Thaler, R. (2020). The law of supply and demand isn’t fair. New York Times.
https://www.nytimes.com/2020/05/20/business/supply-and-demand-isnt-fair.html.