State whether each of the following events will result in a movement along the demand curve...
State whether each of the following events will result in a
movement along the demand curve for Burger King’s chicken-burger in
Halifax or whether it will cause the demand curve to shift either
to the right or to the left. Support your argument by drawing a
graph to illustrate the shift.
1.1 The price of Burger King’s chicken burger declines.
1.2 The Nova Scotia economy enters a period of rapid growth in
incomes.
1.3 A&W claims that they serve beef raised without the use of
hormones or
steroids.
Homework Answers
In each case, D0 and S0 are initial demand and supply curves intersecting at point A with equilibrium price P0 and quantity Q0.
(1.1)
A decrease in price will increase quantity demanded, causing a downward shift along the demand curve from point A to point B, when price falls to P1, increasing quantity demanded to Q1.
(1.2)
Increase in consumer income will increase demand for burgers, shifting demand curve rightward, increasing both price and quantity.
In following graph, D0 shifts right to D1, intersecting S0 at point B with higher price P1 and higher quantity Q1.
(1.3)
The claim of healthy inputs by A&W, a competitor to Burger King, will increase demand for A&W and decrease demand for Burger King's burgers, shifting demand curve leftward, decreasing both price and quantity.
In following graph, D0 shifts left to D1, intersecting S0 at point B with lower price P1 and lower quantity Q1.
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