Wednesday, March 12, 2014

March 12

Read the following newspaper headlines. In each case decide if the event will cause a change in the market demand for beef. If you think the demand will increase, write “increase” to the left of the word “reason”. If not, write “decrease”. Support your answer with the reason why demand shifted. (complementary, substitute, income, taste/preference, or population).



1.    Price of beef rises

____________________Reason_________________________



2.    Millions of immigrants pour into the United States

___________________Reason__________________________



3.    Pork prices drop

        ______________Reason_______________________



4.    Surgeon general warns that eating beef can be hazardous to your health

___________________Reason__________________________



5.    Average wages drop for the 3rd month in a row

___________________Reason__________________________



6.    Newest fad is eating beef hamburgers with anchovies

___________________Reason__________________________



7.    Higher price of charcoal threatens memorial day cookouts

___________________Reason__________________________



8.    Chicken cures many forms of cancer

___________________Reason__________________________



9.    Consumer are given 20% more back in their tax returns

___________________Reason__________________________



10.                       WWIII kills 1/3 of the males in the U.S.

___________________Reason__________________________


For each of the scenarios:
A.  Sketch a rough demand curve for each of the scenarios below and graph the demand change with a dotted line and label the curves.
B.  Identify the reason for the demand change (i.e. substitute effect, income effect, etc.)
C.        Identify as increase or decrease in demand 
1.        What happens to the demand for Oranges if my paycheck becomes larger due to decreased taxes? 
2.        What happens to the demand for Cotton clothing if Polyester becomes a big fad.
3.        What happens to the demand for Hot Dog Buns if hot dogs are determined to be cancer causing.
4.        What happens to the demand for live Gold fish if people learn to like the flavor of live goldfish
5.        What happens to the demand for Coke if the cost of the ingredients is Pepsi increases so much
         that Pepsi must raise its cost by 50% while Coke prices stay the same.
6.        What happens to the demand for Milk if the price of cereal falls to an all time low.
7.        What happens to the demand for Pepsi if Pepsi changes their recipe and many of the consumers don’t like it.

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