For each event, illustrate the impact on the relevant United States market and determine what will happen to the equilibrium price and quantity in that market. I have 2 demand and supply graphs, the first one is for 3 of them and the second is for the last one. I just need someone to tell me if
my answers are right, my answers have a star beside them.
a)Increased popularity among high protein diets.
***Demand curve shifts to the right:Increase in equilibrium price and quantity.
b)Ban on Canadian imports of beef(We are in a US market.
***Supply curve shifts to the left:Increase in Price and decrease in quantity.
c)Persistent drought increases the price of grain feed to cattle.
***Supply curve shifts to the left: Increase in Price and decrease in quantity.
d)Incomes of ranchers increase.(Use Second Graph)
***Demand curve shifts to the right:Increase in Price and quantity.
Are these answers correct??
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Think about d) a bit more. Why does the demand curve shift? Ranchers income rises so demand for beef by ranchers rises, ergo overall demand shifts right. So your answer is fine.
But, is there a supply response? I suggest that increasing income of ranchers will cause other ag folks to re-think their product mix. That is, more people will become attracted to ranching, shifting the supply of beef outward.
Sorry, forgot to say your answers to a,b, and c are correct.
. For each event, illustrate the impact on the relevant market and determine what will happen to the equilibrium price and quantity in that market. (40 points – 10 points per line item)
Event
Market for:
Show which curve shifts
Equilibrium price rise or fall?
Equilibrium quantity increase or decrease?
Economic growth is expected to improve in the next two quarters.
Aluminum
Plastics production capacity has increased.
Plastics
The Japanese government has decided to subsidize its domestic automobile producers with stimulus money.
Automobiles
Manufacturers who use plastic as an input have access to cheaper plastic.
Manufactured goods that use plastic as an input
2. Use the information below of Labor to Total Product (TP) to answer questions A, B, and C. (60 points)
Labor
Total product
(pairs of shoes)
0
0
1
20
2
50
3
75
4
80
5
75
A. Given the information above, what is the marginal product of the third unit of labor?
B. Given the information above, at what point do diminishing marginal returns set in?
C. Given the information above, at what point do negative marginal returns set in?
A. 25
Yes, your answers for events a, b, and c are correct.
For event a, the increased popularity among high protein diets would lead to an increase in demand for protein-rich foods like beef. This would shift the demand curve to the right, resulting in an increase in equilibrium price and quantity.
For event b, the ban on Canadian imports of beef would reduce the supply of beef available in the US market. This would shift the supply curve to the left, causing an increase in price and a decrease in quantity.
For event c, the persistent drought increasing the price of grain feed to cattle would increase the cost of production for beef. This would shift the supply curve to the left, causing an increase in price and a decrease in quantity.
For event d, the incomes of ranchers increasing would lead to an increase in the demand for beef. This is because ranchers would have more purchasing power and would be willing to buy more beef. This increase in demand would shift the demand curve to the right, resulting in an increase in equilibrium price and quantity. Additionally, as you mentioned, there could also be a supply response, where more people become attracted to ranching due to the higher incomes of ranchers. This would shift the supply curve outward, increasing the quantity supplied and potentially offsetting some of the increase in price.