In a supply and demand diagram, draw the shift of the demand curve for hamburgers in your hometown due to the following events. In each case, explain in words the effect on equilibrium price and quantity.

a. The price of tacos increases.

b. All hamburger sellers raise the price of their french fries.

c. Income falls in town. Assume that hamburgers are a normal good for most people.

d. Income falls in town. Assume that hamburgers are an inferior good for most people.

e. Hot dog stands cut the price of hot dogs.

Find the flaws in reasoning in the following statements, paying particular attention to the distinction

between shifts of and movements along the supply and demand curves. Draw a diagram to illustrate

what actually happens in each situation.

a. "A technological innovation that lowers the cost of producing a good might seem at first to

result in a reduction in the price of the good to consumers. But a fall in price will increase demand for the good, and higher demand will send the price up again. It is not certain, therefore, that an innovation will really reduce price in the end."

b. "A study shows that eating a clove of garlic a day can help prevent heart disease, causing many

consumers to demand more garlic. This increase in demand results in a rise in the price of

garlic. Consumers, seeing that the price of garlic has gone up, reduce their demand for garlic.

This causes the demand for garlic to decrease and the price of garlic to fall. Therefore, the

ultimate effect of the study on the price of garlic is uncertain."