economics

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??

img158.imageshack.us/img158/1218/ds1pl8.jpg
img118.imageshack.us/img118/2746/ds2yt1.jpg


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.

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  1. . 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?

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  2. A. 25

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