The market price of cheeseburgers in a college town decreased recently, and the students in an economics class are debating the cause of the price decrease. Some students suggest that the price decreased because several new burger joints have recently opened in the area. Other students attribute the decrease in the price of cheeseburgers to a recent decrease in the price of calzones at local pizza parlors. Everyone agrees that the decrease in the price of calzones was caused by a recent decrease 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 decrease in the price of cheeseburgers is due to the fact that several new burger joints have recently opened in the area. On the following graph, adjust the supply and demand curves to illustrate the first group's explanation for the decrease 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. Demand -0- Supply Demand PRICE (Dolars per cheeseburger)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The market price of cheeseburgers in a college town decreased recently, and the students in an economics class are debating the cause of the price
decrease. Some students suggest that the price decreased because several new burger joints have recently opened in the area. Other students
attribute the decrease in the price of cheeseburgers to a recent decrease in the price of calzones at local pizza parlors. Everyone agrees that the
decrease in the price of calzones was caused by a recent decrease 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.
目
The first group of students thinks the decrease in the price of cheeseburgers is due to the fact that several new burger joints have recently opened in
the area.
On the following graph, adjust the supply and demand curves to illustrate the first group's explanation for the decrease 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.
Demand
-0-
Supply
Demand
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この
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The second group of students attributes the decrease in the price of cheeseburgers to the decrease 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 decrease in the price of
cheeseburgers.
(?)
-O-
Supply
Demand
Supply
Demand
QUANTITY (Cheeseburgers)
Suppose that both of the events you have just analyzed are partly responsible for the decrease 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
decrease in the price of cheeseburners?
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PRICE (Dollars per cheeseburger)

Expert Solution

Step 1

When the new burger joints recently opened in the area than it leads to a rise in the production of cheeseburgers in the area. This is due to a higher producers of cheeseburgers in the market. This leads to a rise in the supply of cheeseburgers in the market that implies a fall in the price of cheeseburgers. But the demand for cheeseburgers does not change. The demand for cheeseburger will fall when there will be decrease in price of calzones at local pizza parlor. Therefore, there will be only increase in the supply of cheeseburgers because we are only considering the situation of new burger joints recently opened in the area.

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