What Will Happen to the Equilibrium Price and Quantity of Beef
ane. If consumers expect the price of some good to rise next week, so we more often than not observe the cost of the skillful rise this week. Explicate this fact using a graph.
If the good is storable, and an increase in price is expected, consumers will want to buy the proficient today, earlier the price increases. As a result, the current demand for the good increases, which results in an increase in the price of the good today. See graph.
ii. The drought in the plain states has made grain, and therefore feed, quite expensive. Many ranchers cannot beget to feed their cattle, and take sold much of their herd for slaughter.
a. What will be the immediate effect of this event on the equilibrium price and quantity of beef? Illustrate using a supply and demand diagram.
Slaughtering the cows will result in an increase in the supply of beef to the marketplace, which volition in turn atomic number 82 to a subtract in the equilibrium price of beef and an increase in the equilibrium quantity of beef. See graph.
Market for beefiness
b. Craven and beef are substitute goods. Illustrate the effect that the slaughter of the cattle herds will have on the equilibrium price and quantity of craven.
As the price of beefiness decreases, consumers will purchase more beef and less craven. The demand for chicken will decrease, causing a decrease in the equilibrium price and quantity of chicken. See graph.
Marketplace for chicken
c. As information technology happens, the slaughter of beef cattle has coincided with a subtract in consumers' income. Assuming that steak is a normal good while hamburgers are an inferior expert, use a supply-and-demand diagram for either market to illustrate the combined consequence of the 2 aforementioned events on the equilibrium cost and quantity of hamburgers and steak.
Every bit consumers' income decreases, the demand for normal goods (such as steak) decreases while the demand for inferior goods (such every bit hamburgers) increases. Proceed in mind that our conclusion from role a is still valid. A lower toll of beef will increase the supply of all goods in which beefiness is an input. Therefore in each of the two markets in question we deal with simultaneous shifts in supply and need.
3. Presume that the markets for sugar cane, rum, and whiskey are initially in equilibrium. Assume further that Hurricane Marilyn destroys much of the Jamaican sugar pikestaff crop. Sugar pikestaff is a principal ingredient in rum, simply it is non an ingredient in whiskey. Clarify the effect of the hurricane on the markets for each of the 3 appurtenances. Explicate using graphs.
Step Ane - The market place for sugar cane
The Hurricane results in a decrease in supply (at any given price, sellers are no longer able to provide as much cane every bit they used to). Equally a result, the equilibrium price of sugar pikestaff will increase, and the equilibrium quantity volition decrease. See graph.
Market for saccharide cane
Step Ii - The marketplace for rum
Sugar pikestaff is a principal ingredient in rum, and it is now more than expensive. An increase in the price of inputs causes a decrease in supply. As a upshot, the equilibrium cost of rum volition increase, and the equilibrium quantity will subtract. The graph will exist like to the ane above.
Footstep 3 - The market for whiskey
It is reasonable to assume whiskey and rum are substitutes. Rum is at present more expensive than it used to be (run across Footstep 2). As a result, more consumers will buy whiskey instead. This will cause an increase in the demand for whiskey, which leads to higher equilibrium toll and quantity of whiskey. See graph.
Market place for whiskey
Source: https://www.washburn.edu/sobu/dnizovtsev/200P03_SD2ans.html
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