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In 2001, an outbreak of hoof-and-mouth disease in Europe led to the burning of millions of cattle carcasses

Economics Dec 13, 2020

In 2001, an outbreak of hoof-and-mouth disease in Europe led to the burning of millions of cattle carcasses. What impact do you think this had on the supply of cattle hides, hide prices, the supply of leather good, and the price of leather goods? Can you give another example of similar outbreak that affected the supply market for agriculture, meat, or other products?

Expert Solution

The outbreak of hoof-and-mouth disease in Europe, which led to the burning of millions of cattle carcasses, led to a decrease in the supply of products that use cattle as inputs to production. That includes meat, meat products, hides, leather goods, etc. Therefore, the supply of cattle hides and leather goods shifted to the left, leading to an increase in the price and a decrease in the equilibrium quantity of these goods.

In a recent example, an outbreak of avian flu in Pampanga in 2017 led to an increase in the price of eggs, as the reduction in the chicken population led to a decreased production of eggs. In a demand and supply graph for the market of eggs, we can illustrate by shifting the supply of eggs to the left, thus, raising price and lowering quantity of eggs in equilibrium.

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