Question

Activity 1

For this activity, you must apply the factors that shift demand and supply to real-life scenarios.

For each of the following sets of statements, draw a diagram that illustrates the likely effect on the market for ground beef. In each case, indicate the impact on equilibrium price and quantity.

A salmonella outbreak occurs and is traced to ground beef.

The price of chicken increases.

The price of corn increases (cattle are feed with corn).

Wages for people who work in the slaughtering house decrease.

Hint: If you believe the events will cause a shift in either the demand or supply schedule, indicate which variable caused the shift in demand or supply. Demand schedule is affected by income, wealth, taste, price of other products, and household expectations about income, wealth, and prices. Supply schedule is affected by cost of production (technology and price of inputs), price of related products, and number of firms. Quantity supplied and demanded are affected by product price.

Activity 2

This activity is another application of demand and supply.

The Milwaukee Brewers are playing their arch-rival Chicago Cubs. Bleacher tickets for the game are sold out, and many more fans would attend if tickets were available.

Draw the demand and supply lines for bleacher tickets for this game. Label the equilibrium bleacher price and the current bleacher price. (Hint: You can use the Word draw program to draw a demand and supply line.) Label the equilibrium price and whether the actual price is above or below equilibrium.

Did the Brewers use the optimum pricing policy for bleacher seats? Explain. If not, explain.

What is the main rationing mechanism to allocate tickets for the game?

Answer 1

A.Salmonella's outbreak is traced to beef.Therefore,demand for beef falls.

B.Chicken is a substitute for beef.If price of chicken rises,the demand for beef rises as people will substitute chicken for beef. Demand for beef rises.

3.As price of corn rises,the cost of producing beef rises.Due to this supply falls and supply curve shifts to left.

4.When wage rate falls,cost of production falls.Supply rises and supply curve shifts to the right.

Since,this question has multiple sub parts,only the first four questions be answered.