Question

After widespread press reports about the dangers of contracting "mad cow disease" by consuming beef from Canada, the likely economic effect on the U.S. demand curve for beef from Canada is _________.
a. a movement down along the demand curve for beef to the right.
b. a shift of the demand curve for beef to the left.
c. a shift of the demand curve for beef to the right.
d. no change; only the supply curve for beef is likely to be affected

Answer 1

Answer:

b. a shift of the demand curve for beef to the left.

Explanation:

Demand for beef will reduce at all prices resulting in a shift in demand curve lower (to the left). This is as a result of the mad cow disease transmission though Canadian beef.

There is an aggregate reduction in demand of beef and the leads to general price decline.

This is illustrated in the attached diagram.

Answer 2

Answer:

Correct answer is (b) a shift of the demand curve for beef to the left.

Explanation:

After the report, the consumption of beef from Canada will decrease due to the fact that the consumer of beef will derived lesser satisfaction because they will want to have change of taste through protecting themselves from contagious disease. Therefore, for any given price of the beef from Canada, the buyer of the beef want lesser of it causing a shift in demand curve to the left.