Macroeconomics help please

wh@t

wh@t

Active member
i need a better explanation of equilibriums and how other markets are affected by one good either losing or gaining value. please keep in mind complimentary goods and factors of production.

Example:

show why and how the using supply and demand graphs labeled by price (Y) and quantity (X).

there are 5 markets, Wheat, Corn, Pork, Beef, Hamburger Buns

Wheat has lost half of its crops (supply), how does this affect the other 4 markets in terms of

supply (increase or decrease),

demand (increase or decrease),

equilibrium price (increase or decrease),

euilibrium quantity (increase or decrease).

please help!

 


Ok. just did this last lesson and need to revise so i'll try and help.

Firstly equilibrium = point where 'supply=demand'

If consumers will demand 10000 units of a product priced at $10 and Suppliers produce 10000 units this would be the equilibrium point (no unsold goods and no customers unable to get hold of the goods)

If the suppliers put the price upto $15, Consumers would only demand 8000 units. So the supplier would have to cut the ammount produced or there will be excess supply.

Complimentary goods.

These are goods which consumers tend to purchase together eg, hamburger buns and burgers(beef).

If the wheat production falls the price of buns will rise as suppliers are supplying a smaller number.

Thus less consumers purchase the buns. Equilibrium price rises. Quantity falls

This effects beef sales because people wont want burgers without buns.

Results in less demand so companies cut back supply and raise price. Equilibrium price rises. Quantity falls.

Substitute goods also come into this eg. If beef prices rise due to less demand more people will choose to buy pork as a substitute. Pork prices will drop and quantity demanded and supplied will rise.

Thats what i came up with quickly, might not have helped. let me no if you need more. i expect someone should be able to explain this better.

 
THANK YOU! +karma.

alright then im definitely on the right track if you're right. because i have come up with the same thing. unless some says differently then i think this is all i need, thanks man.
 
i read over his reply. it seemed to make sense to me and is right, but of course its been since last spring when i took an economics class.
 
yup it covers everything and the more i look at the more i understand exactly whats going on. but thanks for the input. you got the karma bump.
 
You pretty much only need to deal with substitutes and compliments in this problem.

wheat, which the supply goes down, demand is the same, raising price, lowering quantity.

Hamburger Buns come from wheat, so their supply goes down too. Demand is the same, quantitiy is way down, price is way up

Corn im thinking is a substitute here. soo, supply's the same, demand goes up. meaning quantity rises and price rises.

Beef, im thinking is a hamburger. and you dont want hamburgers if you cant have buns. so demand goes down. supply is the same, price goes down, quantity goes down

Pork is Beef's sub, and people want the pork. so, demand goes up, supply's the same. Follow corn.
 
assuming this is an entry level macro class, that is completely correct.

you should criticize your teacher on choice of examples however,

Corn

A. corn is really not a good substitute for wheat for buns.

B. maybe for cornbread to go along with the pork chops, but really please.

C. Corn is a heavily gov't subsidized crop and already has a huge supply because of it, making any increase in demand have pretty much zero affect on price.

D. The corn relationtionship gets further complicated by the fact that it is the feed for beef.(although not too much, for reasons stated above)

Beef

A. increase in price of wheat, would have almost no effect on even purely burger sales, atleast in grocery stores. possibly restaurants as the entire products price would rise. (few buy there burgers, then upon seeing an increase in the price of buns, puts the burgers back.

B burgers are only part of beef sales, even smaller during winter months, especially direct consumer beef sales.

Wheat.

well, its also subsidized by the gov't so it doesnt work.

Pork. well, this sucks because pork chops are a terrible example for a substitue for burgers, as

A. who the fuck eats pork burgers,

sales of pork would not increase much because, well steaks dont need fucking buns either. which further complcates things because well, it falls under the same large category given. beef. and in reality, is a much more likely substitute for burgers than pork is.

 
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