Question

1. A large number of cattle are found to have mad cow disease and as a result, consumer confidence in the safety of beef is shaken. What would an economist predict will happen to the demand curve of beef?

   	A.	Consumers will move to a point lower down the beef demand curve.
   	B.	There will be an upward movement along the beef demand curve.
   	C.	The beef demand curve will shift to the left.
   	D.	The beef demand curve will shift to the right.

1 points   

QUESTION 7

1. Assume that at maximum hourly productions levels, the United States can produce either 8 yards of fabric or 4 bushels of wheat, whereas Japan can produce either 5 yards of fabric or 6 bushels of wheat. Based on this information,

   	A.	both nations will gain from specialization and trade, with the US exporting wheat to Japan, and Japan exporting fabric to the US.
   	B.	the United States will benefit from trading but Japan will not.
   	C.	both nations will gain from specialization and trade, with the US exporting fabric to Japan, and Japan exporting wheat to the US.
   	D.	beneficial trade is impossible between the two countries.

Answer 1

Hi there! As per our Honor Code, in the case of multiple questions, we only answer one question. Hence, we will answer the first one. Kindly re-submit the other question to know its answer.

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Answer

Given Information-

Some mad cow disease has been diagnosed in a large number of cattle. Due to which the consumer’s preferences for beef changes negatively. This means that the consumers will prefer less beef leading to fall in demand.

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A demand curve depicts a graphical relationship between price and quantity demanded.

Change in the demand curve

Whenever there change in price levels of good, then there is movement along the demand curve.

When there is a fall in the price of a good, then there is a downward movement along the demand curve. And when there is a rise in the price of goods, then there is an upward movement along the demand curve.

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Whereas, there is a change in factors other than price like income, tastes, and preferences, prices of a related good, etc, then there is a shift in the demand curve.

When consumers develop tastes and preferences in favor of the good, then the demand curve shifts rightward.

Whereas, when consumers develop tastes and preferences against the good, then the demand curve shifts leftward.

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Thus, when the confidence of the consumer in the safety of beef shakes, then a leftward shift in the demand curve of beef would be predicted by the economists. As the consumers have developed tastes and preferences against the beef.

Hence option (b) is a correct answer, i.e., The beef demand curve will shift to the left