Consider the market for pizza, where well assume there are many buyers and selle
ID: 1091793 • Letter: C
Question
Consider the market for pizza, where well assume there are many buyers and sellers. Note that pizza is considered to be a good thats an alternative to other similar, but different fast food items like sandwiches (e.g. as sold at restaurants like Subway), hamburgers (e.g. as sold at restaurants like McDonalds), and Mexican food (e.g. as sold at restaurants like Taco Bell). Assume as well that pizza is a normal good and that soft drinks and beer are related goods, i.e. goods typically purchased with pizza. You must identify how different events affect this market by matching each event (Question items) to the item which represents the most likely item on the list of effects on the market for pizza (Answer items).
1)Government imposes a tax on beverages like beer and soft drinks, which raises the price of these goods.
2)Increased health code regulations within the fast food industry raise the cost of operation.
3)Increses in customer income
4)Decreses in wages of all pizza employees
5)Decrease in the cost of mozzarella cheese, a key ingredient in all pizza
6)An increase in price competition within the hamburger market leads to significant decreases in the price of fast food items like hamburgers.
7)Government imposes a commodity tax on the demanders of all fast food goods, including pizza.
8)Special interest groups start an advertising campaign which focuses on identifying the greater health benefits of fast foods like sandwiches, relative to pizza, hamburgers and Mexican food.
A.
Increase (shift right) in Demand for Pizza
B.
Decrease (shift left) in Demand for Pizza
C.
Increase (shift right) in Supply of Pizza
D.
Decrease (shift left) in Supply of Pizza
E.
Increase (shift right) in Demand for Pizza and Increase (shift right) in Supply of Pizza
F.
Decrease (shift left) in Demand for Pizza and Decrease (shift left) in Supply of Pizza
G.
Increase (shift right) in Demand for Pizza and Decrease (shift left) in Supply of Pizza
H.
Decrease (shift left) in Demand for Pizza and Increase (shift right) in Supply of Pizza
Explanation / Answer
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