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A Primer on Macroeconomics by Thomas Beveridge

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Applying Demand and Supply Analysis

Single-Shift Cases: We can now apply the tool we have developed by considering the beer industry. Suppose we are given four snippets of information about circumstances in the beer industry and asked to predict their consequences. The four pieces of information are:

Case 1. Beer has been proved conclusively to increase male sexual performance.

Case 2. Wine has become much less expensive than before.

Case 3. There has been a very large harvest of hops. (Hops are an ingredient in the production of beer.)

Case 4. Beer workers have negotiated a ten percent increase in their wages.

We will treat each of these situations separately. First, think about each situation. Jot down in the following table what you think ...

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