Subpart (a):
causes for the shift in the demand curve for the firm.
Subpart (a):
Explanation of Solution
The demand comes from all the economic agents such as the households, firms as well as the government. The demand is depended on the price level of the economy. The increase and decrease in the price level determines the level of demand in the economy. The aggregation of all the individual demands in the economy is known as the aggregate demand thus, the aggregate demand explains the relationship between the general price level and the level of real
Here, in the case of the McDonald's, the main reason for the increase in the quantity demanded which shifts the demand curve of the firm towards the right is the opening up of the new school. This means that the population in the locality increases and this increase in the population causes the increase in the quantity demanded of the firm. Thus, the demand shifter in the case of McDonald's is the rise in population.
Concept introduction:
Aggregate Demand curve: It is the curve which shows the relationship between the price level in the economy and the quantity of real GDP demanded by the economic agents such as the households, firms as well as the government.
Subpart (b):
causes for the shift in the demand curve for the firm.
Subpart (b):
Explanation of Solution
When the customers are more concerned about the cleanliness in the restaurants, all the restaurants have to keep employees for the purpose of cleaning the restaurant premises as well as the floor of the restaurant and keep it dirt free. This means that the demand for the labor for these purposes increases and this increase in demand and shift in demand is caused because of the changes in the tastes and preferences of the consumers.
Concept introduction:
Aggregate Demand curve: It is the curve which shows the relationship between the price level in the economy and the quantity of real GDP demanded by the economic agents such as the households, firms as well as the government.
Subpart (c):
causes for the shift in the demand curve for the firm.
Subpart (c):
Explanation of Solution
The robots do the work of cleaning and thus, it can replace a labor for the purpose of the cleaning. This means that the robots are the substitutes for the labor for the cleaning purpose. So, when the robots become cheaper, it would increase the demand for robots and cause fall in the demand for the cleaning labors. Here, the demand shifter is the substitutes of labor which is robots.
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Chapter 18 Solutions
Modern Principles: Microeconomics
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