Compare both the Scenario 1 and Scenario 2 graphs. Notice that after completing both graphs, you can now see a difference between them thatwasn't apparent before the shifts because each graph indicates different magnitudes for the supply and demand shifts in the market for pensUse the results of your answers on both the Scenario 1 and Scenario 2 graphs to complete the following table. Begin by indicating the overall changein the equilibrium price and quantity after the shift in demand or supply for each shift-magnitude scenario. Then, in the final column, indicate theresulting change in the equilibrium price and quantity when supply and demand shift in the direction you previously indicated on both graphs. If youcannot determine the answer without knowing the magnitude of the shifts, choose Cannot determine.Equilibrium ObjectPriceQuantityScenario 1O TrueO FalseChange in Equilibrium ObjectsScenario 2When Shift Magnitudes Are UnknownTrue or False: When both the demand and supply curves shift, the curve that shifts by the larger magnitude determines the effect on the iundetermined equilibrium object. 13. How shifts in demand and supply affect equilibriumConsider the market for pens, Suppose that the number of students who are allergic to the rubber used in pencil erasers increases, leading morestudents to switch from pencils to pens in school. Further, the price of plastic, a major input in the pen production process, has dropped sharply.On the following graph, labeled Scenario 1, indicate the effect these two events have on the demand for and supply of pensNote: 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 backto its original position, just drag it a little farther.PRCE (Dolars perpen)BPRICE (Dollars perpen)109842Next, complete the following graph, labeled Scenario 2, by shifting the supply and demand curves in the same way that you did on the Scenario 1graph11Scenario 12SupplyScenario 2DemandSupplyDemand7QUANTITY (Millions of pens)B9Demand1010SupplyO?Demand1Supply?

The supply and demand curve is a graphical representation of the relationship between the quantity…

13. How shifts in demand and supply affect equilibrium Consider the market for pens. Suppose that the number of students who are allergic to the rubber used in pencil erasers increases, leading more students to switch from pencils to pens in school. Further, the price of plastic, a major input in the pen production process, has dropped 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 (Dolars perpen) 2 PRICE (Dollars perpen) S # 7 S S 9 Scenario 1 8 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 Supply Scenario 2 Demand Supply Demand 10 Demand Supply 10 Demand Supply 2

13. How shifts in demand and supply affect equilibrium Consider the market for pens. Suppose that the number of students who are allergic to the rubber used in pencil erasers increases, leading more students to switch from pencils to pens in school. Further, the price of plastic, a major input in the pen production process, has dropped 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 (Dolars perpen) 2 PRICE (Dollars perpen) S # 7 S S 9 Scenario 1 8 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 Supply Scenario 2 Demand Supply Demand 10 Demand Supply 10 Demand Supply 2

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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