10. How shifts in demand and supply affect equilibrium Consider the market for pens. Suppose that a new educational study has proven that the practice of writing, erasing, and rewriting improves students' ability to process information, leading parents to steer away from pen use in favor of pencils. Moreover, the price of ink, an important input in pen production, has increased considerably. 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. Scenario 1 10 Supply Demand Supply 3 Demand 3 10 QUANTITY (Millions of pens) 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. (? Scenario 2 10 Supply Demand Supply 3 Demand 3 10 QUANTITY (Millions of pens) 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. PRICE (Dollars per pen) PRICE (Dollars per pen) 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. Change in Equilibrium Objects When Shift Equilibrium Object Price Magnitudes Are Unknown Scenario 1 Scenario 2 Quantity True or False: When both the demand and supply curves shift, you can always determine the effect on price and quantity without knowing the magnitude of the shifts. o True o False
10. How shifts in demand and supply affect equilibrium Consider the market for pens. Suppose that a new educational study has proven that the practice of writing, erasing, and rewriting improves students' ability to process information, leading parents to steer away from pen use in favor of pencils. Moreover, the price of ink, an important input in pen production, has increased considerably. 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. Scenario 1 10 Supply Demand Supply 3 Demand 3 10 QUANTITY (Millions of pens) 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. (? Scenario 2 10 Supply Demand Supply 3 Demand 3 10 QUANTITY (Millions of pens) 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. PRICE (Dollars per pen) PRICE (Dollars per pen) 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. Change in Equilibrium Objects When Shift Equilibrium Object Price Magnitudes Are Unknown Scenario 1 Scenario 2 Quantity True or False: When both the demand and supply curves shift, you can always determine the effect on price and quantity without knowing the magnitude of the shifts. o True o False
Chapter1: Making Economics Decisions
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![10. How shifts in demand and supply affect equilibrium
Consider the market for pens. Suppose that a new educational study has proven that the practice of
writing, erasing, and rewriting improves students' ability to process information, leading parents to
steer away from pen use in favor of pencils. Moreover, the price of ink, an important input in pen
production, has increased considerably.
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.
Scenario 1
10
Supply
Demand
Supply
3
Demand
3
10
QUANTITY (Millions of pens)
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.
(?
Scenario 2
10
Supply
Demand
Supply
3
Demand
3
10
QUANTITY (Millions of pens)
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.
PRICE (Dollars per pen)
PRICE (Dollars per pen)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F72f6d7ae-9c23-4359-9380-9dd9f287a119%2F4b3e4eb2-dbb3-41c7-bbfe-e50b492e106f%2Fzr0qpe9.png&w=3840&q=75)
Transcribed Image Text:10. How shifts in demand and supply affect equilibrium
Consider the market for pens. Suppose that a new educational study has proven that the practice of
writing, erasing, and rewriting improves students' ability to process information, leading parents to
steer away from pen use in favor of pencils. Moreover, the price of ink, an important input in pen
production, has increased considerably.
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.
Scenario 1
10
Supply
Demand
Supply
3
Demand
3
10
QUANTITY (Millions of pens)
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.
(?
Scenario 2
10
Supply
Demand
Supply
3
Demand
3
10
QUANTITY (Millions of pens)
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.
PRICE (Dollars per pen)
PRICE (Dollars per pen)
![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.
Change in Equilibrium Objects
When Shift
Equilibrium
Object
Price
Magnitudes Are
Unknown
Scenario 1
Scenario 2
Quantity
True or False: When both the demand and supply curves shift, you can always determine the effect
on price and quantity without knowing the magnitude of the shifts.
o True
o False](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F72f6d7ae-9c23-4359-9380-9dd9f287a119%2F4b3e4eb2-dbb3-41c7-bbfe-e50b492e106f%2Flohiswb.png&w=3840&q=75)
Transcribed Image Text: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.
Change in Equilibrium Objects
When Shift
Equilibrium
Object
Price
Magnitudes Are
Unknown
Scenario 1
Scenario 2
Quantity
True or False: When both the demand and supply curves shift, you can always determine the effect
on price and quantity without knowing the magnitude of the shifts.
o True
o False
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