Question

1. In each case below, identify the effect on the demand curve for steak: does it shift right or left? (Hint: remember the law of demand, substitutes in consumption, complements in consumption, etc.) a. An increase in the price of lamb - b. A decrease in the population c. An increase in consumer income (you may assume steak is a normal good) d. A decrease in the price of steak sauce e. An increase in advertising by chicken producers

Answer 1

a.)An increase in the price of lamb: Demand curve will shift rightward because lamb is a substitute good and there is a positive relationship between price and quantity of substitute good,

b.)A decrease in population: Demand curve will shift left because if the population decreases consumers of steak will decrease due to which demand decrease and demand curve shifts left.

c.)An increase in consumer income: Demand curve will shift right because as consumer income increase steak being normal good its demand increases.

d.)A decrease in the price of steak sauce: Demand curve will shift right because steak sauce is complimentary good as steak sauce price decreases demand for steak will increase.

e.) An increase in advertising by chicken producers: Demand curve will shift left because chicken producers have incresed advertising for chicken because of which steak consumers will also get influenced and reduce their consumption of steak.