Question

assume that a bird flu causes a decline in the Turkey population the month before Thanksgiving (When many families plan turkey dinners). we would expect that:

a) equilibrium price would rise and equilibrium quantity would increase if the supply of turkeys changed by a smaller amount then the demand for turkeys changed

b) equilibrium price would rise and equilibrium quantity would increase if supply of turkeys changed by a greater amount than the demand for turkeys changed.

c) equilibrium price would fall and equilibrium quantity would increase if the supply of turkeys Changed by a greater amount than the demand for turkeys changed.

d) equilibrium price would fall and equilibrium quantity would increase if the supply of turkeys Changed by a smaller amount than the demand for turkeys changed.

Answer 1

Answer: Correct option is A.

Explaination: Since, bird flue casuses the decline in Turkey Population so naturally supply for them would decline, as a result supply function would shift left. Hence Price must go up. Now if many families plan to go out for turkey dinner then demand for them must go up and demand curve would shift right. Again there will be price increase but quanity of equlibrium would increase if demand shift would be higher than the supply shift.