The market price of hamburgers 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 a new type of grill allows restaurants to cook a hamburger in half the time. Other students attribute the decrease in the price of hamburgers to a recent increase in the price of french fries. Everyone agrees that the increase in the price of french fries was caused by a recent increase in the price of potatoes, which are not generally used in making hamburgers. The first group of students think the decrease in the price of hamburgers is due to the fact that a new type of grill allows restaurants to cook a hamburger in half the time. On the following graph, adjust the supply and demand curves to illustrate the first group's explanation for the decrease in the price of hamburgers. Supply Demand Supl Demand QUANTITY (Hamburgers) PRICE (Dollars per hamburger)
The market price of hamburgers 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 a new type of grill allows restaurants to cook a hamburger in half the time. Other students attribute the decrease in the price of hamburgers to a recent increase in the price of french fries. Everyone agrees that the increase in the price of french fries was caused by a recent increase in the price of potatoes, which are not generally used in making hamburgers. The first group of students think the decrease in the price of hamburgers is due to the fact that a new type of grill allows restaurants to cook a hamburger in half the time. On the following graph, adjust the supply and demand curves to illustrate the first group's explanation for the decrease in the price of hamburgers. Supply Demand Supl Demand QUANTITY (Hamburgers) PRICE (Dollars per hamburger)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Transcribed Image Text:8. Another supply and demand puzzle
The market price of hamburgers 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 a new type of grill allows restaurants to cook a hamburger in half the time. Other
students attribute the decrease in the price of hamburgers to a recent increase in the price of french fries. Everyone agrees that the increase in the
price of french fries was caused by a recent increase in the price of potatoes, which are not generally used in making hamburgers.
The first group of students think the decrease in the price of hamburgers is due to the fact that a new type of grill allows restaurants to cook a
hamburger in half the time.
On the following graph, adjust the supply and demand curves to illustrate the first group's explanation for the decrease in the price of hamburgers.
O
Supply
Demand
Supply
Demand
QUANTITY (Hamburgers)
PRICE (Dollars per hamburger)
Transcribed Image Text:Supply
Demand
Supply
Demand
QUANTITY (Hamburgers)
Suppose that both of the causes suggested by the students are partly responsible for the decrease in the price of hamburgers. Based on your analysis
of the explanations offered by the two groups of students, how would you figure out which of the possible causes is the dominant cause of the
decrease in the price of hamburgers?
O Whichever change occurred first must have been the primary cause of the change in the price of hamburgers.
O If the equilibrium quantity of hamburgers decreases, then the supply shift in the market for hamburgers must have been larger than the
demand shift.
O If the equilibrium quantity of hamburgers decreases, then the demand shift in the market for hamburgers must have been larger than the
supply shift.
O If the price decrease was large, then the supply shift in the market for hamburgers must have been larger than the demand shift.
PRICE (Dollars per hamburger)
Expert Solution
Step 1
A market is a place where the buyers and sellers interacts with each other and the exchange of goods and services takes place between the buyers and sellers at a mutually agreed price level in the economy. The market equilibrium price and quantity are determined at the intersection of the market demand curve and the market supply curves.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education