Answer to Question #235005 in Finance for Lee3415

Question

Which of the following would cause the demand curve for beef hamburger to shift to the right? Choose the correct answer. Provide a reason for your correct answer. Also indicate why each of the other answers are incorrect and draw graphs for each indicating how the curves will shift or how there will be movement along a curve. (8)

The correct answer is


a) A decline in the price of cattle feed

Insert graph here

Answer 1

A decline in the price of cattle feed means affordability (cattle maintenance cost is low) hence rise in demand

At image (a) the shift

The demand curve D shifts towards the left to D1. The price, p remains the same but the quantity demanded shifts from Q2 to Q1. Some of the factors that may lead to this include;

-income decrease

-decrease in prices of related goods

-population decrease

At image (b) the movement along the curve

Quantity demanded at Q translates to price P. Movement along the curve (contraction) makes the prices to move higher to a new price Pi, and this lowers the quantity demanded form Q to Qi.

One factor that may lead to this behavior is increase in price of the cattle feed