Answer to Question #125393 in Microeconomics for rondon

Question

It has just been reported that eating red meat is bad for yourhealth. Using supply and demand curves, demonstrate thereport’s likely effect on the equilibrium price and quantityof steak soldin the market.

Answer 1

Equilibrium is a situation in which demand and supply are in balance. Equilibrium is likely to change if there is a change in any of the shift factors (demand and supply).

Shift in the factors of demand cause a change in equilibrium price and quantity. Decrease in the demand due to the change in its shift factor leads to downward shift in demand curve.

In our case the price and quantity will shift to the left and the demand will fall.