Analyze what happens to the market for cheeseburgers if the price of the cheese rises (cheese being the part of the cost of a cheesburger). Be specific and explain (or is not affected) for each of the following:

Question

1. supply curve
2. the demand curve
3. the equilibrium quantity
4. The equlibrium price

Answer 1

1. The supply curve shifts by the amount of the price increase.
2. The demand curve doesn't change.
3. equilibrium quantity decrease
4. equlibrium price increase
If the price goes up (and it has to, because the ingredients are more expensive), people will buy fewer cheeseburgers. Demand remains constant, but the equilibrium price rises along the demand curve.