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The following are the assumed supply and demand schedules for hamburgers in Collegetown: Demand Schedule Supply Schedule Price Quantity Demanded per Year (thousands) Price Quantity Supplied per Year (thousands) $2.75 14 $2.75 32 2.50 18 2.5 30 2.25 22 2.25 28 2 26 2 26 1.75 30 1.75 24 1.5 34 1.5 22 Plot the supply and demand curves and indicate the equilibrium price and quantity. What effect would a decrease in the price of beef (a hamburger input) have on the equilibrium price and quantity of hamburgers, assuming all other things remained constant? Explain your answer with the help of a diagram. What effect would an increase in the price of pizza (a substitute commodity) have on the equilibrium price and quantity of hamburgers, assuming again that all other things remain constant? Use a diagram in your answer.

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Microeconomics: Principles & Policy

14th Edition
William J. Baumol + 2 others
Publisher: Cengage Learning
ISBN: 9781337794992

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Chapter
Section
BuyFindarrow_forward

Microeconomics: Principles & Policy

14th Edition
William J. Baumol + 2 others
Publisher: Cengage Learning
ISBN: 9781337794992
Chapter 4, Problem 2TY
Textbook Problem
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The following are the assumed supply and demand schedules for hamburgers in Collegetown:

Demand Schedule Supply Schedule
Price Quantity Demanded per Year (thousands) Price Quantity Supplied per Year (thousands)
$2.75 14 $2.75 32
2.50 18 2.5 30
2.25 22 2.25 28
2 26 2 26
1.75 30 1.75 24
1.5 34 1.5 22

  1. Plot the supply and demand curves and indicate the equilibrium price and quantity.
  2. What effect would a decrease in the price of beef (a hamburger input) have on the equilibrium price and quantity of hamburgers, assuming all other things remained constant? Explain your answer with the help of a diagram.
  3. What effect would an increase in the price of pizza (a substitute commodity) have on the equilibrium price and quantity of hamburgers, assuming again that all other things remain constant? Use a diagram in your answer.

To determine

(a)

The demand curve and supply curve.

Explanation of Solution

The graph shows that DD is ...

To determine

(b)

To find: The effect of decrease in price of beef.

To determine

(c)

To find: The effect of decrease in price of pizza.

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