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Suppose mcdonalds is an inferior good

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    Assignment Help >> Business Management

    1. Below, there are 3 supply and demand problems. For each problem, there are two events happening simultaneously. Shift the supply and/or the demand curves, ensuring to label all shifts and new curves clearly. Indicate what happened to equilibrium price and quantity after all the shifts are completed. Hint: A dominating effect means the shift is much larger for that event.

    A. Suppose McDonalds is an inferior good. Two events occur:

    a. A recession hits the economy. This effect dominates.

    b. The US government makes it so cows must be free range, making it more expensive for McDonalds to produce its hamburgers.

    B. Suppose we are looking at the market for eye glasses:

    a. Glasses have become trendy.

    b. The materials used to make contacts have become more expensive. Contacts and glasses are substitutes in production here.

    C. Suppose we are looking at the retirement communities:

    a. The baby boomer generation is aging and will soon be moving to retirement communities.

    b. Suppliers of retirement communities expect that the price to stay in them will decrease in the next two years.

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