¶ … decision to expand large animal veterinary services to Randolph County implies that the number of veterinary practices will increase, which means that the dependent variable in this case is the gap between the actual demand for large animal veterinary services and the supply. If the actual demand for this type of service is higher than their supply and people can afford to pay for them, then expansion has economic sense. Conversely, if the actual demand is below the supply and/or people can't afford to pay for the services, expansion is not a feasible idea.
The first step to determine the market supply is to determine the capacity of the existing veterinary practices in Randolph County to serve the town's demand for veterinary services. The demand is of 2 types: one type for pet care and the other one for food animal (health, maintenance and emergency).
For the sake of the exercise, let us assume that each existing veterinary practice has the capacity to serve 30% of the vet services for pets and 20% of the vet services for food animal. According to West Virginia Bureau of Employment Programs, in the end of 2006, the number of vet practices in Randolph County is 3 and the number of employees is 16 (WVBEP, 2006). Since that the agricultural activity is high in this area, which implies high potential for veterinary activity and since we know that vet activity employs 0.6% of the 'Professional, Scientific, and Technical Services' industry, which at its turn employs 5.2% of the U.S. population (BLS, 2007).
The supply capacity is equal to: the number of vet practices multiplied by their capacity to deliver pet care services plus the number of vet practices multiplied by their capacity to deliver food animal services.
SC = X3* 20% + X3* 30% where,
SC - supply capacity
X3 - the number of other veterinary practices
DG = (X2/X1)*X5 + (X2/X1)*X4 - SC where,
DG - demand gap
X2 - population income levels
X1 - Size of Randolph County
X2 / X1 = Average income per individual in Randolph County
X5 - number of the population that owns food animal
X4 - number of population that owns pets
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