Suppose that a disease strikes chicken farmers killing a very large number of ch

Question

Suppose that a disease strikes chicken farmers killing a very large number of chickens, and as a result KFC doubles the prices of its sandwiches and dinners. What is the expected effect in the market for McD’s burgers? Circle or identify all that are correct.

      a.         The demand for McD’s burgers will increase.

      b.         The price of McD’s burgers will increase.

      c.         The demand for workers by McD’s will increase.

      d.         The marginal revenue product of workers hired by McD’s will be higher.

      e.         None of the above is expected to happen.

Explanation / Answer

Answer is A. The demand for McD’s burgers will increase.

Reason being the substitute good, increase in the price of one good will result in the increase in demand for the other product

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