Monday, October 31, 2005

Beef?

After a two-year embargo on U.S beef, Japan has finally decided that if certain criteria are met, the U.S can resume exporting the product to Japan. The trade embargo was initiated in 2003 after mad cow disease was found in U.S cattle. Specific criteria that must be met by U.S exporters can be found through the link at the bottom of this blog. Before the embargo, Japan was the U.S largest beef importer. With regards to economics, the embargo can be viewed as a leftward shift in the demand curve which, everything else held constant, would have resulted in lower prices for beef. As output and prices of beef fell, the labor demand curve for workers employed in the beef sector should have also shifted to the left, resulting in lower pay and less work for the labor suppliers. Empirically, I am not aware if this was in fact the result of the embargo. Regardless of whether economic theory held true in this instance, do you believe that the renewed trade with Japan will result in a rightward shift of the demand curve, causing prices of beef to increase? Will the labor demand curve for beef workers shift to the right as well?

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