Question

After widespread press reports about the dangers of contracting "mad cow disease" by consuming beef from Canada, the likely economic effect on the U.S. demand curve for beef from Canada is

(a) a shift of the demand curve for beef to the right.
(b) a movement down (to the right) along the demand curve for beef.
(c) a shift of the demand curve for beef to the left.
(d) no change; only the supply curve for beef is likely to be affected.

Answer 1

The correct answer is option c.

Step-by-step explanation:

After the widespread press reports about the dangers of contracting mad cow disease, the consumers in the US will not prefer to buy beef from Canada. This will cause demand to decline. As the demand decreases at the same price level, the demand curve will shift to the left.

This leftward shift in the demand curve will cause the quantity to decline. The supply curve will intersect the demand curve at a lower point. The price of beef will also eventually decline.