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Economics Question: If A Grocery Store Had A Sale On Hot Dogs, It Would Be Reasonable To Expect:?

4 June 2009 550 views 5 Comments

Choose one:
a. An increase in the demand for sausages (assume that consumers are indifferent between hot dogs and sausages)
b. An increase in the demands for hot dogs
c. An increase in the demand for hot dog buns
d. A decrease in the quantity demanded for hot dog buns.

5 Comments »

  • dv_2000 said:

    C is the only correct answer. Hot dogs buns are a compliment to hot dogs so when there is a sale on hot dogs, the demand for hot dog buns will increase for every price value on the demand curve.
    A sale on hot dogs is a price change, not a demand change. The poster above makes note of this as well but misses the wording of the question. The quantity demanded of hot dogs will increase but demand will not. Its a subtle but important difference (quantity demanded vs demand) but economics teachers like to make a point of it.

    # 4 June 2009 at 11:16 am
  • richard t said:

    b and c……………depending on if other stores did the same or didn’y

    # 4 June 2009 at 11:16 am
  • Garacaiu said:

    B and C Everytime the grocery I go to has a sale on hotdogs, the shelves empty out and the buns sell out.

    # 4 June 2009 at 11:16 am
  • Robert B said:

    c) so the grocer would raise the price of buns to off set the loss on the hot dogs.

    # 4 June 2009 at 11:16 am
  • Baby Sleep Positioners said:

    B
    The best answer is B. C is also correct because typically, people eat hot dogs in hot dog buns. Economically, we state that hot dogs and hot dog buns are “compliments.” One drives the sales of the other.
    As price decreases, the amount ( Quantity) demanded by any rational individual deriving utility from hot dogs will increase. Basically, when something is on sale, people tend to be more likely to buy it, or if they were going to buy it anyway, they could very likely decide to buy more and “stock up.”
    I can’t draw it here, but graphically, your demand curve remains the same. It has not shifted. Rather, the point of demand has slid down the demand curve to a point where quantity of hot dogs consumed is increased in response to the lowered price of hot dogs.
    I attempted to insert a graph, but for some reason, yahoo did not like it when I tried that…. Go figure.
    I hope that helps.

    # 4 June 2009 at 11:16 am

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