Answer to Question #118872 in Microeconomics for Simma

Question #118872

Assume that you work in the beef industry. Beef is a normal good. Consider the following events.
What curve shifts (show the change), and what is the effect on equilibrium price and quantity in the beef industry.

No. 1 Event: A medical society publishes a study that beef contributes to heart disease.
a) What curve shifts (and show this change): __________________
b) Is there an increase or decrease in the price of beef: _______________
c) Is there an increases or decrease in quantity of beef: ______________

No. 2 Event: The price of feed grain, input to your industry, increases.
a) What curve shifts (and show this change): ___________
b) Is there an increase or decrease in the price of beef: _______________
c) Is there an increases or decrease in quantity of beef: ______________

Expert's answer

1.a)The aggregate demand curve shifts to the left.

b)the price increases

c) the quantity decreases

2. a)The aggregate demand curve shifts to the right.

b)the prices decreases

c)the quantity increases