Use the demand and supply model to explain effects of the fo

Use the demand and supply model to explain effects of the following events on the market for hamburgers. Comment on changes in equilibrium price and equilibrium quantity: The price of steak (a substitute for hamburgers) decreases. More firms enter the hamburger business. Price of production inputs decreases and income of consumers decreases.

Solution

a) As the price of steak decreases the demand for steak increases and demand for hamburgeres come down the demand curve moves left and the equilibrium price and quantituy comes down.

b) As the more firms enters the supply for hamburgers increases and supply for hamburgeres increases by which the supply curve will shift right and the equilibrium price decreases and quantity will increase.

c) As price of the production input decreases meaning the supply will increases and the supply will shift right and income of consumers increased the demand curve will move right , the equilibrium quantity increases but the equilibrium price can not say.