The market price of cheeseburgers in a college town increased recently, and the students in an economics class are debating the cause of the price increase. Some students suggest that the price increased because several burger joints in the area have recently gone out of business. Other students attribute the increase in the price of cheeseburgers to a recent decrease in the price of French fries.
Everyone agrees that the decrease in the price of French fries was caused by a recent decrease in the price of potatoes, which are not generally used in making cheeseburgers.
The first group of students thinks the increase in the price of cheeseburgers is due to the fact that several burger joints in the area have recently gone out of business.
On the following graph, adjust the supply and demand curves to illustrate the first group’s explanation for the increase in the price of cheeseburgers.
NEED HELP ON THE GRAPH FOR THIS GROUP
The second group of students attributes the increase in the price of cheeseburgers to the decrease in the price of French fries.
On the following graph, adjust the supply and demand curves to illustrate the second group’s explanation for the increase in the price of cheeseburgers.
NEED HELP ON THE GRAPH FOR THIS GROUP
Suppose that both of the events you analyzed above are partly responsible for the increase in the price of cheeseburgers. Based on your analysis of the explanations offered by the two groups of students, how would you figure out which of the possible causes was the dominant cause of the increase in the price of cheeseburgers?
a. Which ever change occurred first must have been the primary cause of the change in the price of cheeseburgers.
b. If the equilibrium quantity of cheeseburgers decreases, then the demand shift in the market for cheeseburgers must have been larger than the supply shift.
c. If the price increase was large, then the supply shift in the market for cheeseburgers must have been larger than the demand shift.
d. If the equilibrium quantity of cheeseburgers decreases, then the supply shift in the market for cheeseburgers must have been larger than the demand shift.
Please help with the two graphs above and the multiple choice question.