Chapter 17: Problem 12

An increase in the demand for steak could be caused quickly by a(n) (LO2) a) fall in the price of steak b) increase in the supply of steak c) expectation of a future cutback in the supply of steak d) a decline in the price of chicken

Short Answer

Expert verified

A quick increase in the demand for steak could be caused by the expectation of a future cutback in the supply of steak (option c). This is because consumers might decide to buy more steak now to avoid facing scarcity or higher prices later.

Step by step solution

Analyze Option (a) - Fall in the price of steak

According to the law of demand, when the price of a product decreases, demand for the product will increase if all other factors remain constant. In this case, a fall in the price of steak would lead to an increase in the demand for steak.

Analyze Option (b) - Increase in the supply of steak

An increase in the supply of steak would not directly lead to an increase in the demand for steak. The supply-side factor would affect the quantity of steak available, but it would not directly influence consumers' preferences or willingness to buy more steak. Therefore, option (b) is not the correct answer.

Analyze Option (c) - Expectation of a future cutback in the supply of steak

If consumers expect that there will be a future reduction in the supply of steak, they might decide to buy more steak now to avoid facing scarcity or higher prices later. This expectation could lead to a quick increase in the demand for steak. Therefore, option (c) could potentially be the correct answer.

Analyze Option (d) - A decline in the price of chicken

If the price of chicken, a substitute for steak, decreases, the demand for chicken will likely increase. However, a decline in the price of chicken might not necessarily lead to an increase in the demand for steak, as consumers might prefer cheaper chicken over steak. So, option (d) is not the correct answer.

Select the correct option

Based on our analysis of the four options presented, we can conclude that option (c) - "expectation of a future cutback in the supply of steak" is the most likely to quickly cause an increase in the demand for steak.