- (a) Suppose a decrease in consumers’ income causes an increase in the demand for chicken and a decrease in the demand for beef; Explain which good is an inferior good and which is a normal good. How will the equilibrium price and quantity change for each good?
- In the United States, corn is often used as an ingredient in animal feed for livestock. Why does an increase in the use of corn to make ethanol, an additive that is used in gasoline, raise the price of meat? Use supply and demand curves for the corn market and the meat market to explain your answer.
- What is the law of supply? Give two examples of how you have observed the law of supply at work.
- If the demand and supply curve for dish washers are:
D = 800 – 4P, S = 10 + 6P
Where P is the price of dish washers, what is the quantity of dish washers bought and sold at equilibrium? (show all work)
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