Question

In an effort to reduce the surplus of dairy products, agricultural legislation paid dairy farmers to slaughter their herds and sell them to packinghouses (meat producers) in 1996-1997. how did this influence the market for beef?

Answer 1

Since there was a surge of beef available in the market, this would naturally drive prices down. Packing houses would not want to keep the perishable inventory on hand so they would lower prices to get rid of it. This is a natural extension of the law of supply and demand. If the supply of an item is high, usually the price tends downward.