ext, complete the following graph, labeled Scenario 2, by shifting the supply and demand curves in the same way that you did on the Scenario 1 raph. PRICE (Dollars per pen) 10 8 7 2 1 0 0 1 2 Equilibrium Object Price Quantity 4 Scenario 2 O True O False Supply Demand QUANTITY (Millions of pens) Scenario 1 8 ompare both the Scenario 1 and Scenario 2 graphs. Notice that after completing both graphs, you can now see a difference between them that asn't apparent before the shifts because each graph indicates different magnitudes for the supply and demand shifts in the market for pens. 9 10 se the results of your answers on both the Scenario 1 and Scenario 2 graphs to complete the following table. Begin by indicating the overall change the equilibrium price and quantity after the shift in demand or supply for each shift-magnitude scenario. Then, in the final column, indicate the sulting change in the equilibrium price and quantity when supply and demand shift in the direction you previously indicated on both graphs. If you annot determine the answer without knowing the magnitude of the shifts, choose Cannot determine. Demand Supply Change in Equilibrium Objects Scenario 2 When Shift Magnitudes Are Unknown ue or False: When both the demand and supply curves shift, the curve that shifts by the smaller magnitude determines the effect on the determined equilibrium object.
ext, complete the following graph, labeled Scenario 2, by shifting the supply and demand curves in the same way that you did on the Scenario 1 raph. PRICE (Dollars per pen) 10 8 7 2 1 0 0 1 2 Equilibrium Object Price Quantity 4 Scenario 2 O True O False Supply Demand QUANTITY (Millions of pens) Scenario 1 8 ompare both the Scenario 1 and Scenario 2 graphs. Notice that after completing both graphs, you can now see a difference between them that asn't apparent before the shifts because each graph indicates different magnitudes for the supply and demand shifts in the market for pens. 9 10 se the results of your answers on both the Scenario 1 and Scenario 2 graphs to complete the following table. Begin by indicating the overall change the equilibrium price and quantity after the shift in demand or supply for each shift-magnitude scenario. Then, in the final column, indicate the sulting change in the equilibrium price and quantity when supply and demand shift in the direction you previously indicated on both graphs. If you annot determine the answer without knowing the magnitude of the shifts, choose Cannot determine. Demand Supply Change in Equilibrium Objects Scenario 2 When Shift Magnitudes Are Unknown ue or False: When both the demand and supply curves shift, the curve that shifts by the smaller magnitude determines the effect on the determined equilibrium object.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:13. How shifts in demand and supply affect equilibrium
Consider the market for pens. Suppose that new research has been published stating that the process of writing, erasing, and rewriting improves
memorization, leading parents to avoid giving their children pens in favor of pencils. Further, the price of plastic, a major input in the pen production
process, has increased sharply.
On the following graph, labeled Scenario 1, indicate the effect these two events have on the demand for and supply of pens.
Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back
to its original position, just drag it a little farther.
PRICE (Dollars per pen)
10
9
8
2
1
0
+
0 1
2
Scenario 1
Supply
Demand
3
4 5 6
7
QUANTITY (Millions of pens)
8
9
10
Demand
Supply
Next, complete the following graph, labeled Scenario 2, by shifting the supply and demand curves in the same way that you did on the Scenario 1
graph.
Transcribed Image Text:Next, complete the following graph, labeled Scenario 2, by shifting the supply and demand curves in the same way that you did on the Scenario 1
graph.
PRICE (Dollars per pen)
10
8
2
1
0
0
1
2
Equilibrium Object
Price
Quantity
O True
Scenario 2
O False
Supply
Demand
3 4
7
QUANTITY (Millions of pens)
Scenario 1
8
9
Compare both the Scenario 1 and Scenario 2 graphs. Notice that after completing both graphs, you can now see a difference between them that
wasn't apparent before the shifts because each graph indicates different magnitudes for the supply and demand shifts in the market for pens.
10
Use the results of your answers on both the Scenario 1 and Scenario 2 graphs to complete the following table. Begin by indicating the overall change
in the equilibrium price and quantity after the shift in demand or supply for each shift-magnitude scenario. Then, in the final column, indicate the
resulting change in the equilibrium price and quantity when supply and demand shift in the direction you previously indicated on both graphs. If you
cannot determine the answer without knowing the magnitude of the shifts, choose Cannot determine.
Demand
Supply
Change in Equilibrium Objects
Scenario 2
True or False: When both the demand and supply curves shift, the curve that shifts by the smaller magnitude determines the effect on the
undetermined equilibrium object.
When Shift Magnitudes Are Unknown
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