Question

Suppose you are the manager of a McDonald fast food restaurant, in Toronto area, and are analyzing the market for hamburgers. Graphically illustrate the impact each of the following would have on demand or supply. Also show how equilibrium price and quantity have changed. a. Winter starts and the weather turns sharply colder. b. The price of pizza, a substitute from a Pizza Pizza, falls. c. The price of information equipment installed for the restaurant falls. d. A better method of harvesting coffee beans is introduced. e. Wage rates in general increase.

Answer 1

a)Demand for hamburgers increase in winter and so the demand curve shifts to the right.The equilibrium price rises and quantity increases.

b)The price of pizza a substitute falls ,demand for hamburgers will fall and people will demand more of the substitute good.This represents a leftward shift of the demand curve.The result is fall in equilibrium price and quantity .

c)When price of the equipment falls , input cost falls . Cost of production of hamburger falls .So producers produces more and supply curve shifts  to the right. Equilibrium price falls and quantity increases.

AUGUST 2016 1016 अगस्त AUGUST 971 Q.Q u was 0 Notes Appoint

d)There will be an incresae in the demand for complement coffee and so the demand for hamburger will decrease.The demand curve will shift to the left and equilibrium price and quantity will fall.

e)A rise in the wage rate causes the demand for hamburger which is a normal good to increase. The demand curve will shift to the right .So equilibrium price will rise and quantity will increase.