The table below gives changes that occur in the market for peanut butter. Fill i
ID: 1142950 • Letter: T
Question
The table below gives changes that occur in the market for peanut butter. Fill in the table below indicating whether the given change shifts the demand or supply curve and if that curve shifts rightward or leftward.
Demand or Supply?
Right or Left?
The price of peanuts (an input in peanut butter) increases
Peanut butter is an inferior good and consumer income decreases
Consumers expect the price of peanut butter to increase dramatically next month
Hormel Foods discontinues production of Skippy brand peanut butter
A major national study shows that eating peanut butter will reduce the risk of a heart attack
The price of jelly (a complement to peanut butter) increases sharply
Demand or Supply?
Right or Left?
The price of peanuts (an input in peanut butter) increases
Peanut butter is an inferior good and consumer income decreases
Consumers expect the price of peanut butter to increase dramatically next month
Hormel Foods discontinues production of Skippy brand peanut butter
A major national study shows that eating peanut butter will reduce the risk of a heart attack
The price of jelly (a complement to peanut butter) increases sharply
Explanation / Answer
Demand or Supply?
Right or Left?
The price of peanuts (an input in peanut butter) increases
Peanut butter is an inferior good and consumer income decreases
Consumers expect the price of peanut butter to increase dramatically next month
Hormel Foods discontinues production of Skippy brand peanut butter
A major national study shows that eating peanut butter will reduce the risk of a heart attack
The price of jelly (a complement to peanut butter) increases sharply
The price of jelly (a complement to peanut butter) increase sharply: Demand; Left.
Explanation for 1st statement:
When input price increases, cost of production will increase which leads to a decrease in supply of peanut butter. So, this will shift the supply curve to left.
Explanation for 2nd statement:
For an inferior good, an increase in income leads to decrease in demand and a decrease in income leads to increase in demand. So, the de demand curve shifts to right.
Explanation for 3rd statement:
When consumer expects that price will increase in near future, the present demand would increase. This will lead to a rightward shift in demand curve.
Explanation for 4th statement:
When a producer stops production of peanut butter, the aggregate supply would decrease. This leads to a shift of supply curve to left.
Explanation for 5th statement:
When the study says that consumption of peanut butter is good for health, this leads to increase in the demand for peanut butter. This leads to rightward shift in the demand curve.
Explanation for 6th statement:
When the price of the complementary good(jelly) increases, the demand for jelly will decrease and the demand for peanut butter also decrease. This will lead to a leftward shift in the demand curve for peanut butter.
Demand or Supply?
Right or Left?
The price of peanuts (an input in peanut butter) increases
Supply LeftPeanut butter is an inferior good and consumer income decreases
Demand RightConsumers expect the price of peanut butter to increase dramatically next month
Demand RightHormel Foods discontinues production of Skippy brand peanut butter
Supply LeftA major national study shows that eating peanut butter will reduce the risk of a heart attack
Demand RightThe price of jelly (a complement to peanut butter) increases sharply
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