Question

8. Suppose demand for beef decreases and demand for leather stays the same. What happens to...

8. Suppose demand for beef decreases and demand for leather stays the same. What happens to the price of leather? Explain your answer.

Homework Answers

Answer #1

Beef and leather are complements in production.

A fall in the demand for beef will lead to a fall in the price as well as quantity sold of beef in the market.

This implies, a decrease in the price of beef decreases the slaughter of cows, thereby decreasing the supply of leather.

As a result, in the leather market, keeping demand unchanged, a decrease in the supply of leather will shift the supply curve of leather to the left, leading to an increase in the price of leather and fall in its quantity sold in the market.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Suppose labor and capital are substitute resources, and the price of capital decreases. A. What happens...
Suppose labor and capital are substitute resources, and the price of capital decreases. A. What happens to the demand for labor and capital? B. Do the producers produce more or less of the final good? C. Now suppose labor and capital are complement resources, and the price of capital decreases. Do the producers produce more, less, or the same amount of the final good? I understand the answer to part A but I am unsure about B and C. Please...
Suppose the government gives subsidy to companies that produce beef, and at the same time, it...
Suppose the government gives subsidy to companies that produce beef, and at the same time, it gives families living below the poverty line food stamp to buy beef. What would be the effect of these two policies on the price and quantity of beef sold in the marketplace? Explain your answer using your knowledge of demand and supply.
In the market for hot dogs, what happens when the price of beef goes up and...
In the market for hot dogs, what happens when the price of beef goes up and the price of hot dog buns goes up? [hot dogs are made of beef. Also, the term "hot dog" here refers to just the sausage. So you buy hot dogs at the store. And you also buy "hot dog buns" at the store. This gets confusing for some people, especially non-native English speakers] What happens to supply and demand in the market for hot...
3 Consider the market for Alberta beef. For each of the following events, what happens to...
3 Consider the market for Alberta beef. For each of the following events, what happens to the equilibrium price and quantity of beef? Show how you obtained your answer by drawing a demand/supply diagram. Put your answers in the table below, indicating what curve shifts (Demand or Supply) and in what direction éê or if no curve shifts (NC). Indicate the resulting effect on priceéê and quantityéê a.) Producers introduce a new hormone supplement that increases the weight of cattle...
Suppose the supply for French bread decreases. Explain what happens to the consumer surplus in the...
Suppose the supply for French bread decreases. Explain what happens to the consumer surplus in the market for French bread. Illustrate your answer with diagrams. (5 points)
Use several sentences to explain whether each of the following increases, decreases, or stays the same...
Use several sentences to explain whether each of the following increases, decreases, or stays the same after a price ceiling: a. Consumer surplus b. Producer surplus c. Total welfare
Given supply, if Demand decreases, what happens to equilibrium price and output sales? If the decrease...
Given supply, if Demand decreases, what happens to equilibrium price and output sales? If the decrease in Demand is larger than increase in Supply, what happens to equilibrium price and output sales?
if the world price of a commodity decreases, what happens to aggreate demand in the long...
if the world price of a commodity decreases, what happens to aggreate demand in the long run and short run for one of the commodity producing countries ( show using AS/AD modelling ). Give detailed explanation of what happens to output,income and unemployment in that country due to lower price of the commodity.
if the world price of a commodity decreases, what happens to aggreate demand in the long...
if the world price of a commodity decreases, what happens to aggreate demand in the long run and short run for one of the commodity producing countries ( show using AS/AD modelling ). Give detailed explanation of what happens to output,income and unemployment in that country due to lower price of the commodity.
The multiplier will increase if the MPC Increases Decreases Stays the same Depends on what MPC...
The multiplier will increase if the MPC Increases Decreases Stays the same Depends on what MPC and what multiplier you are talking about. "If the government had an annually balanced budget, so G=T every year, we would expect" The economy to be more stable Injections and leakages to be easier to set equal The economy to be less stable Injections to usually be greater than leakages The multiplier effect: Lessens upswings and downswings in business activity Reduces the MPC Magnifies...