Some people worry that the fast food restaurant industry will have a harder time attracting teenage workers in the years to come because baby boomers had fewer children than earlier generations. a . Explain how fewer teenagers might lead to higher hamburger prices b. Explain how retirees, who need more supplemental income, might change your answer to part a

Answer 1

a . As the supply of teen-aged workers falls, the wage rate for teen-aged workers must rise, ceteris
paribus. This means higher resource prices for the fast food industry, so the supply curve for
hamburgers will shift to the left, leading to higher hamburger prices and fewer hamburgers sold.
b. The supply of "retirees" to the fast food industry may increase, offsetting the decreased supply of
teenagers. Depending on the relative size of the two shifts, the price of hamburgers may rise, fall, or
stay the same.