Question

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: ______________

Answer 1

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