Friday, March 29, 2013

Ranchers Selling Herds As Costs Rise

The New York Times reported that ranchers in the US last year were selling their cattle at a faster pace than in previous years in an effort to reduce the amount of cattle.  Why?  Higher costs.  As predicted in the market models, as costs increase the firm has a profit-maximizing incentive to reduce their output, which is exactly what we see happening.

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