Question

In: Economics

Draw a graph to show the effect on the equilibrium price and quantity of hamburgers if...

Draw a graph to show the effect on the equilibrium price and quantity of hamburgers if

(a) the price of hot dogs increases

(b) a new breed of cattle is developed with much faster growth

(c) research proves that this new breed results in hamburgers with more cholesterol

(d) the wages of workers who process the hamburgers patties increase

Expert Solution

a) As hamburger and hot dogs are substitute goods,so if the price of substitute good increases, the demand for hamburger rises,

Demand curve will shift rightward result in

Equilibrium price - increases

Equilibrium Quantity - increases.

b) The supply curve will shift to the right since cattle is a raw material in this market. So as the supply of raw material rises its price fall and if the price of raw material falls, supply will increases.

equilibrium price - decrease

equilibrium quantity - Increases.

c) the demand curve will shift to the left for hamburger market, since hamburgers are now unhealthy and will affect the preferences of the consumer.

Equilibrium price - decreases

Equilibrium Quantity - decreases.

d) as wages of worker is the cost of production and as the cost of production rises,Supply will shift to the left

Equilibrium price - increases

Equilibrium Quantity - decreases.

Rahul Sunny answered 2 years ago

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