Based on the graph below, Calculate the size of the shortage that would occur if
ID: 1219613 • Letter: B
Question
Based on the graph below, Calculate the size of the shortage that would occur if the price were $2. ______________
Suppose that the following two events affect the market for beef:
(1) Cattle feed prices increase.
(2) Consumers learn that consuming red meat, including beef, can lead to cancer.
Which two graphs below illustrate how these two events would affect the market for beef, and what would the the resulting change in equilibrium price and equilibrium quantity? (Hint: 4 answers should be chosen)
Price increases Price Decreases Price indeterminant
Quantity Increases Quantity Decreases Quantity indeterminant
Price increases Price Decreases Price indeterminant
Quantity Increases Quantity Decreases Quantity indeterminant
Explanation / Answer
Actually the access to the gapg is restricted. It is asking for a user name and ID. Anyways I can guide you how to solve these questions, in case you have any problem you can post is as a comment.
Answer 1:
See, to compute the shortage at $2, just subtract the quantity demanded at Price = $2 which you will come to know from the demand curve and Quantity supplied at $2 which is depicted by the supply curve. The difference will give you the value of shortage.
Answer 2:
The cattle feed price increase will increase the price of the raw materials . Thus, select the graph which depicts the supply curve shifting leftwards (upward).
The second change will reduce the quantity demanded. So, select the graph which depict the demand curve shifting leftwards ( downwards).
The quantity decreases but the impact on prices is indeterminate as the magnitude of the shift of the demand and supply curve is unknown.
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