l>EC 200 Practice problems - Supply and also Demand

If the an excellent is storable, and boost in price is expected, consumer will desire to purchase the great today, before the price increases. As a result, the current demand for the good increases, which results in rise in the price of the great today. Watch graph.

2. The drought in the plain states has made grain, and also therefore feed, quite expensive. Countless ranchers can not afford to feed their cattle, and have sold lot of their herd for slaughter. A. What will certainly be the immediate effect of this event on the equilibrium price and also quantity of beef? illustrate using a supply and demand diagram. Slaughtering the cows will an outcome in boost in the it is provided of beef to the market, which will consequently lead to a decrease in the equilibrium price the beef and boost in the equilibrium quantity of beef. Watch graph.

market for beef

b. Chicken and also beef space substitute goods. Show the impact that the slaughter the the cattle herds will have actually on the equilibrium price and also quantity of chicken. together the price that beef decreases, consumers will certainly buy more beef and less chicken. The demand for chicken will certainly decrease, leading to a decrease in the equilibrium price and also quantity that chicken. See graph.

market for chicken c. As it happens, the slaughter that beef livestock has synchronized with a to decrease in consumers" income. Assuming that steak is a normal an excellent while hamburgers space an worse good, use a supply-and-demand diagram for either industry to highlight the linked effect that the two previously mentioned events ~ above the equilibrium price and quantity that hamburgers and also steak. together consumers" earnings decreases, the need for normal goods (such as steak) decreases when the need for inferior items (such together hamburgers) increases. Keep in mind that our conclusion from part a is tho valid. A reduced price the beef will increase the it is provided of all products in i beg your pardon beef is one input. Because of this in every of the two industries in question we attend to simultaneous move in supply and demand.

Steak: S increases, D decreases.

You are watching: The graph shows the price of a good compared to the quantity demanded. this graph demonstrates how

Hamburgers: S increases, D increases.
The price the steak will certainly decrease. We cannot to speak for certain what will take place to quantity, because that will rely on the family member magnitude that the two shifts. The equilibrium amount of hamburgers sold will increase. We cannot speak for sure what will take place to the equilibrium price that a hamburger, due to the fact that that will count on the loved one magnitude that the two shifts.

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3. Assume the the industries for street cane, rum, and also whiskey are initially in equilibrium. Assume more that Hurricane Marilyn destroys much of the Jamaican street cane crop. Sugar cane is a primary ingredient in rum, however it is not an ingredient in whiskey. Analyze the result of the hurricane on the sectors for every of the three goods. Describe using graphs.

Step One - The industry for street cane The Hurricane outcomes in a diminish in supply (at any given price, sellers are no much longer able to administer as lot cane together they supplied to). As a result, the equilibrium price of street cane will certainly increase, and also the equilibrium quantity will decrease. See graph.

Market because that sugar cane

Step two - The market for rum sugar cane is a major ingredient in rum, and also it is now an ext expensive. An increase in the price that inputs reasons a diminish in supply. Together a result, the equilibrium price of rum will certainly increase, and the equilibrium quantity will decrease. The graph will certainly be comparable to the one above.

Step three - The industry for whiskey the is reasonable to assume whiskey and also rum room substitutes. Rum is now an ext expensive 보다 it supplied to it is in (see step Two). As a result, much more consumers will buy whiskey instead. This will certainly cause an increase in the need for whiskey, which leads to higher equilibrium price and also quantity that whiskey. Watch graph. Sector for whiskey