Question

a) Describe four factors which may influence a consumer’s demand for meat in their weekly grocery shop.

b) Explain what is represented by the Marginal Benefit Curve. Explain what is represented by the Demand Curve. Explain clearly why the Marginal Benefit curve and the Demand Curve overlap.

c) Explain what is represented by the Marginal Cost Curve. Explain what is represented by the Supply Curve. Explain clearly why the Marginal Cost curve and the Supply Curve overlap.

d) Show the Consumer Surplus and the Producer Surplus on a Demand-Supply graph, when the market is in equilibrium. Explain why the regions shown are the Consumer Surplus, and the Producer Surplus

e) Suppose a new, identical, firm enters the market. Show graphically any change to the equilibrium outcome, and any change in Producer and Consumer Surplus as a result of the new firm

f) (Bonus) For any change in Surplus identified in part (e), give an economic interpretation for why this change in surplus has occurred.

Answer 1

A) four factors that influence eat market

1)increasing price of meat

2)economic condition

3)quality is is also important factor of influence meat market

4)personal preference

B) Demand curve represented by naginal benefit curve,and demand curve describe relationship between certain commodity price and amount that consumers are willing to purchase at given price.

Demand curve is the same as the marginal benefit curve because pay willingness for the next unit of a good is equal to the marginal benefit you receive to expect from the use of the next unit of the good,Quantity declines the marginal benefit also declines

C) Marginal cost represents the relation between the marginal cost incurred by a firm in the short-run product of a sservice or goods and the produced output quantity .

Supply curve represent the relationship between price of product and quantity of product that a seller is willing and able to supply

Supply curve show changes between quantity andprice . In short run variable factor changes to increase supply. Firm require to cover production of variable factor and it tend to supply the goods at price level to cover cost, so price level equal or greater than average variables cost.

Supply cost is raising portion of marginal cost curve over and above minimum average curve cost.

D) Consumer surplus above equilibrium and producer surplus below equilibrium. supply curve shows quantity that firms are willing to supply at given price

Consumer surplus is gap between consumer price that are willing to pay and the market equilibrium price.

Producer surplus is the gap between the producer price for which producers are willing to sell a product and the market equilibrium price.