ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Consider the demand for shrimp shown in Figure 2. Suppose the current demand for shrimp is D (in black), the current price of a pound of shrimp is $10, and the current quantity demand for shrimp is 200K. Which of the following correctly describes the effect of a decrease in the price of a pound of shrimp?
 
 
A) The price of a pound of shrimp falls to $3, the demand curve shifts left to D'' (red), and the quantity demand for shrimp remains at 200K pounds.
 
 
 
B) The price of a pound of shrimp falls to $3, the demand curve remains at D (black), and the quantity demand for shrimp decreases to 150K pounds.
 
 
 
C) The price of a pound of shrimp falls to $3, the demand curve shifts right to D' (blue), and the quantity demand for shrimp increases to 270K pounds.
 
 
 
D) The price of a pound of shrimp falls to $3, the demand curve remains at D (black), and the quantity demand for shrimp increases to 270K.
$15
$10
D'
$3
D
D"
150K
200K
270K
QD
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Transcribed Image Text:$15 $10 D' $3 D D" 150K 200K 270K QD
Expert Solution
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Step 1

Through the information given above, you can see different prices and quantity demanded where at $15 prices the quantity demanded for the shrimp is 150k. Similarly, when the price is $10, the quantity demanded for the same is 200k and lastly, when the price falls from $10 to $3 the quantity demanded rises from 200k to 270k. According to the law of demand when prices fall demand increases, and when prices rise, the quantity for the same decreases. 

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