Question

Your friend, a PoliSci major, is planning a picnic for a total of 20 peoplein the department. He knows that getting 40 items of food – 20 hot dogsand 20 hamburgers – is the exact amount of food needed for thishungry group. Each attendee gets two tickets for food.Unfortunately, he procrastinated just a bit too long and the store hadonly 10 of the wagyu burgers PoliSci majors like. So, he was forced toget 10 additional organically-sourced, free-range hot dogs.Worried that all the free-range hot dogs will not make up for themissing wagyu hamburgers, he calls you to ask what will happen.Having taken a most excellent Macro class, you dispel his fears and useeconomics to explain what to expect.Given the new situation, what happens to the "market" for hot dogs,hamburgers, as well as buns or anything else you can think of assumingthe picnic is a closed economy?

Answer 1

The change in the demand for hamburgers is uncertain when the price of a substitute good increases and the price of a complement good increases. It will depend on how people perceive the substitute and complement relationship.

Step-by-step explanation:

In this situation, the price of a substitute good, hot dogs, has increased, and the price of a complement good, hamburger buns, has also increased. When the price of a substitute good increases, it generally leads to an increase in demand for the other good. So, in this case, the increase in the price of hot dogs might lead to an increase in the demand for hamburgers. However, the change in the price of a complement good, like hamburger buns, can have an uncertain effect on the demand for hamburgers. If the price of hamburger buns also increases, it might decrease the demand for hamburgers, as people might be less likely to buy hamburgers without the necessary complement.

As a result, the change in the demand for hamburgers is uncertain, and it will depend on how people perceive the substitute and complement relationship between hot dogs, hamburgers, and buns. To illustrate this situation, we can use a graph of the demand curve for hamburgers with the quantity demanded on the x-axis and the price of hamburgers on the y-axis. The increase in the price of hot dogs would shift the demand curve for hamburgers to the right, indicating an increase in demand.