Another supply and demand puzzle The market price of cheeseburgers in a college town increased recently, and the students in an economics class are debating the cause of the price increase. Some students suggest that the price increased because several burger joints in the area have recently gone out of business. Other students attribute the increase in the price of cheeseburgers to a recent increase in the price of calzones at local pizza parlors. Everyone agrees that the increase in the price of calzones was caused by a recent increase in the price of pizza dough, which is not generally used in making cheeseburgers. Assume that burger joints and pizza parlors are entirely separate entities—that is, there aren't places that serve both cheeseburgers and calzones. The first group of students thinks the increase in the price of cheeseburgers is due to the fact that several burger joints in the area have recently gone out of business. On the following graph, adjust the supply and demand curves to illustrate the first group’s explanation for the increase in the price of cheeseburgers. Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. DemandSupplyPRICE (Dollars per cheeseburger)QUANTITY (Cheeseburgers)Demand Supply The second group of students attributes the increase in the price of cheeseburgers to the increase in the price of calzones at local pizza parlors. On the following graph, adjust the supply and demand curves to illustrate the second group's explanation for the increase in the price of cheeseburgers. DemandSupplyPRICE (Dollars per cheeseburger)QUANTITY (Cheeseburgers)Demand Supply Suppose that both of the events you have just analyzed are partly responsible for the increase in the price of cheeseburgers. Based on your analysis of the explanations offered by the two groups of students, how would you figure out which of the possible causes was the dominant cause of the increase in the price of cheeseburgers? Whichever change occurred first must have been the primary cause of the change in the price of cheeseburgers. If the equilibrium quantity of cheeseburgers decreases, then the demand shift in the market for cheeseburgers must have been larger than the supply shift. If the price increase was large, then the supply shift in the market for cheeseburgers must have been larger than the demand shift. If the equilibrium quantity of cheeseburgers decreases, then the supply shift in the market for cheeseburgers must have been larger than the demand shift.

Another supply and demand puzzle The market price of cheeseburgers in a college town increased recently, and the students in an economics class are debating the cause of the price increase. Some students suggest that the price increased because several burger joints in the area have recently gone out of business. Other students attribute the increase in the price of cheeseburgers to a recent increase in the price of calzones at local pizza parlors. Everyone agrees that the increase in the price of calzones was caused by a recent increase in the price of pizza dough, which is not generally used in making cheeseburgers. Assume that burger joints and pizza parlors are entirely separate entities—that is, there aren't places that serve both cheeseburgers and calzones. The first group of students thinks the increase in the price of cheeseburgers is due to the fact that several burger joints in the area have recently gone out of business. On the following graph, adjust the supply and demand curves to illustrate the first group’s explanation for the increase in the price of cheeseburgers. Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. DemandSupplyPRICE (Dollars per cheeseburger)QUANTITY (Cheeseburgers)Demand Supply The second group of students attributes the increase in the price of cheeseburgers to the increase in the price of calzones at local pizza parlors. On the following graph, adjust the supply and demand curves to illustrate the second group's explanation for the increase in the price of cheeseburgers. DemandSupplyPRICE (Dollars per cheeseburger)QUANTITY (Cheeseburgers)Demand Supply Suppose that both of the events you have just analyzed are partly responsible for the increase in the price of cheeseburgers. Based on your analysis of the explanations offered by the two groups of students, how would you figure out which of the possible causes was the dominant cause of the increase in the price of cheeseburgers? Whichever change occurred first must have been the primary cause of the change in the price of cheeseburgers. If the equilibrium quantity of cheeseburgers decreases, then the demand shift in the market for cheeseburgers must have been larger than the supply shift. If the price increase was large, then the supply shift in the market for cheeseburgers must have been larger than the demand shift. If the equilibrium quantity of cheeseburgers decreases, then the supply shift in the market for cheeseburgers must have been larger than the demand shift.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Another supply and demand puzzle

The market price of cheeseburgers in a college town increased recently, and the students in an economics class are debating the cause of the price increase. Some students suggest that the price increased because several burger joints in the area have recently gone out of business. Other students attribute the increase in the price of cheeseburgers to a recent increase in the price of calzones at local pizza parlors.

Everyone agrees that the increase in the price of calzones was caused by a recent increase in the price of pizza dough, which is not generally used in making cheeseburgers. Assume that burger joints and pizza parlors are entirely separate entities—that is, there aren't places that serve both cheeseburgers and calzones.

The first group of students thinks the increase in the price of cheeseburgers is due to the fact that several burger joints in the area have recently gone out of business.

On the following graph, adjust the supply and demand curves to illustrate the first group’s explanation for the increase in the price of cheeseburgers.

Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther.

DemandSupplyPRICE (Dollars per cheeseburger)QUANTITY (Cheeseburgers)Demand Supply

The second group of students attributes the increase in the price of cheeseburgers to the increase in the price of calzones at local pizza parlors.

On the following graph, adjust the supply and demand curves to illustrate the second group's explanation for the increase in the price of cheeseburgers.

DemandSupplyPRICE (Dollars per cheeseburger)QUANTITY (Cheeseburgers)Demand Supply

Suppose that both of the events you have just analyzed are partly responsible for the increase in the price of cheeseburgers. Based on your analysis of the explanations offered by the two groups of students, how would you figure out which of the possible causes was the dominant cause of the increase in the price of cheeseburgers?

Whichever change occurred first must have been the primary cause of the change in the price of cheeseburgers.

If the equilibrium quantity of cheeseburgers decreases, then the demand shift in the market for cheeseburgers must have been larger than the supply shift.

If the price increase was large, then the supply shift in the market for cheeseburgers must have been larger than the demand shift.

If the equilibrium quantity of cheeseburgers decreases, then the supply shift in the market for cheeseburgers must have been larger than the demand shift.

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Demand and Supply:

Changes in the demand and supply of a commodity cause variations in the equilibrium price and equilibrium quantity. Market equilibrium typically shifts depending on the nature of shifts in demand and supply curves. In economics, supply and demand refers to the relationship between the quantity of a commodity that producers want to sell at different prices and the quantity that consumers want to buy.

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