You are forgetting the huge subsidies that further hide the real cost of meat from the consumer.
Raising animals is such an inefficiant way to farm food, people seldom question this. Unless you can't use the land for anything else. There simply isn't enough land to go around.
Agreed, and such subsidies tend to prop up factory farming operations, not small operations. In fact, the government makes life quite difficult for small farmers (again, read Salatin).
I know this is the situation in some fertile & densely populated countries, such as the Netherlands.
In other places, such as here in Austria for example, nobody is going to use the alpine pastures that cows graze on for growing anything else.
I am pretty sure it is the same in Switzerland and Bavaria, and probably other mountainous regions such as in Japan and Greece (although the grazing livestock in these places might not be cattle).
Said alpine pastures don't allow for a large quantity of cows, though.
And you Austrians really have to care for the cows in winter (prepare some sheltered and warm barns, with feed - I've been there, and was surprised at how easy we Uruguayans have it with our cows)
If he could easily double the number of customers, it means the current price is below equilibrium.
Why doesn't he charge more?
I think it goes beyond pure numbers when dealing with a small business. There are personal relationships at stake. Overestimating the price risks alienating regular customers and that could kill a small business.
I could be old-fashioned and myopic, though. Maybe someone can figure out a way to have the best of both worlds.
Regarding cost, I no longer worry about the amount of money my family spends on groceries. Yes, we spend $5/pound for beef, and $2.50/pound for chicken, but this is stuff we are putting in our bodies--it's what keeps us alive. I feel that price shouldn't be the driving factor in what we eat.