Which curve shifts, and in what direction, when the following events occur in the local burrito...

Which curve shifts, and in what direction, when the following events occur in the local burrito shop market?

a. College students arrive back into town for the fall semester

b. Two more Chipotle restaurants open

c. Several pizza shops open

Solutions

Expert Solution

a. As college students arrive back into town for the fall semester, the demand for burritos will increase and the demand curve for burritos will shift rightward from D1 to D2 and as the economy moves from point A to point B, the equilibrium price of burritos will increase from P1 to P2 and the equilibrium quantity of burritos will increase from Q1 to Q2.

b. As two more Chipotle restaurants open, the supply of burritos will increase and the supply curve for burritos will shift rightward from S1 to S2 and as the economy moves from point A to point B, the equilibrium price of burritos will decrease from P1 to P2 and the equilibrium quantity of burritos will increase from Q1 to Q2.

c. As several pizza shops open, and as pizza and burritos are substitutes of each other, due to opening of several pizza shops, consumers will substitute burritos with pizza and thus the demand for burritos will fall and the demand curve for burritos will shift leftward from D1 to D2 and as the economy moves from point A to point B, the equilibrium price of burritos will decrease from P1 to P2 and the equilibrium quantity of burritos will decrease from Q1 to Q2.

Rahul Sunny answered 1 week ago

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