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Eggzactly what you need for micro

Penny Brooks

2nd December 2016

There is a cracking article in this week's Economist about the changing demand and supply in the market for the 100 billion eggs produced by British hens over the last decade. Elements of price elasticity of demand and of supply, signalling function for resource allocation, the price mechanism, and one of the examiners' classic examples of perfect competition are all here.

The plots hatched by animal rights campaigners to publicise the conditions of battery farmed hens have led to a big change in consumer demand, away from the cheapest eggs from caged birds towards the more humane production from free-range chickens. As a result farmers have scrambled out of one market and into the other, particularly as free-range are more profitable. But sales of organic eggs are static; presumably paying a bit more for free-range is enough to clear our consciences, and we are not prepared to shell out almost twice as much for organic eggs. So perhaps there is even some behavioural economics to be eggs-tracted from this story, as well!

Penny Brooks

Formerly Head of Business and Economics and now Economics teacher, Business and Economics blogger and presenter for Tutor2u, and private tutor

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