The market price of hamburgers in a college town decreased recently, and the students in an economics class are debating the cause of the price decrease. Some students suggest that the price decreased because a new type of grill allows restaurants to cook a hamburger in half the time. Other students attribute the decrease in the price of hamburgers to a recent decrease in the price of pizza at local pizza parlors. Everyone agrees that the decrease in the price of pizza was caused by a recent decrease in the price of marinara sauce, which is not generally used in making hamburgers. Assume that burger joints and pizza parlors are entirely separate entities - that is, there aren't places that serve both hamburgers and pizza.
The first group of students thinks the decrease in the price of hamburgers is due to the fact that a new type of grill allows restaurants to cook a hamburger in half the time.
1. According to the graph, adjust the supply curve and demand curve to illustrate the first group?s explanation for the decrease in the price of hamburgers
The second group of students attributes the decrease in the price of hamburgers to a recent decrease in the price of pizza at local pizza parlors.
2. According to the graph, adjust the supply curve and demand curve to illustrate the second group?s explanation for the decrease in the price of hamburgers
3. Suppose that both of events you analyzed above are partly responsible for the decrease in the price of hamburgers. Based on your analysis of explanations offered by two groups of students, how will you figure about which of the possible causes was dominant cause for the decrease in the price of hamburgers?
a. If the equilibrium quantity of hamburgers increases, then the supply shift in the market of hamburgers must have been larger than the demand shift.
b. If the equilibrium quantity of hamburgers increases, then the demand shift in the market of hamburgers must have been larger than the supply shift.
c. Whichever change occurred first must have been the primary cause of change in the price of hamburgers.
d. If the decrease in the price was small, then the supply shift in the market of hamburgers must have been larger than the demand shift.
Answers: 2
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