The market price of cheeseburgers 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 the price of beef, an important ingredient for making cheeseburgers, has decreased. Other students attribute the decrease in the price of cheeseburgers to a recent increase in the price of french fries. Everyone agrees that the increase in the price of french fries was caused by a recent increase in the price of potatoes, which are not generally used in making cheeseburgers.

The second group of students attributes the decrease in the price of cheeseburgers to the decrease in the price of calzones at local pizza parlors.

Suppose that both of the events you have just analyzed are partly responsible for the decrease in the price of cheeseburgers. Based on your analsis of the explanations offered by the two groups of students, how would you figure out which of the possible causes was the dominant cause of the decrease in the price of cheeseburgers?

a. If the equilibrium quantity of cheeseburgers increases, then the demand shift in the market for cheeseburgers must have been larger than the supply shift.
b. Whichever change occurred first must have been the primary cause of the change in the price of cheeseburgers.
c. If the equilibrium quantity of cheeseburgers increases, then the supply shift in the market for cheeseburgers must have been larger than the demand shift.
d. If the price decrease was small, then the supply shift in the market for cheeseburgers must have been larger than the demand shift.

Respuesta :

Answer:

c. If the equilibrium quantity of cheeseburgers increases, then the supply shift in the market for cheeseburgers must have been larger than the demand shift.

Explanation:

Please find answer and explanation attached

Ver imagen buchinnamani208
Ver imagen buchinnamani208

Things often happen due to different reasons.  If the equilibrium quantity of cheeseburgers increases, then the supply shift in the market for cheeseburgers must have been larger than the demand shift.

  • If the equilibrium quantity of cheeseburgers decreases, then the supply shift in the market for cheeseburgers may be due to higher than the demand shift.

Note that the shift in supply from S0 to S1 is known to be larger than a change in demand from D0 to D1.

Note that a Decrease in the price of input is known to bring about a change or increase in the supply of commodity in the market. This is because the cost of production decreases.

Learn more about supply shift from

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