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. 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 Scenario 2 Equilibrium Object Scenario 1 When Shift Magnitudes Are Unknown Price Quantity 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. O True O False

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
icon
Related questions
Question
Consider the market for pens. Suppose that increased medical concerns over lead pencils have led schools to steer away from pendl use in favor of
pens. 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
B
-0-
7
Supply
3.
Demand
10
QUANTITY (Millions of pens)
MacBook Air
AA
吕0
F10
F2
F3
F4
PRICE (Dollars per pen)
Transcribed Image Text:Consider the market for pens. Suppose that increased medical concerns over lead pencils have led schools to steer away from pendl use in favor of pens. 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 B -0- 7 Supply 3. Demand 10 QUANTITY (Millions of pens) MacBook Air AA 吕0 F10 F2 F3 F4 PRICE (Dollars per pen)
Demand
1
3
4
5
6
8
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.
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
Equilibrium Object
Scenario 1
Scenario 2
When Shift Magnitudes Are Unknown
Price
Quantity
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.
O True
O False
MacBook Air
PRICE (I
Transcribed Image Text:Demand 1 3 4 5 6 8 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. 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 Equilibrium Object Scenario 1 Scenario 2 When Shift Magnitudes Are Unknown Price Quantity 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. O True O False MacBook Air PRICE (I
Expert Solution
Step 1

Answer:

If the medical concern over lead pencils increases causing the increased demand for pens then the demand curve of pens will shift to the right.

If the price of ink (input) increases then the cost of production will increase and the firms will decrease supply. As a result, the supply curve will shift to the left.

Scenario 1: the shift in demand is greater than the shift in supply (shift in demand>shift in supply)

Economics homework question answer, step 1, image 1

According to the above figure, when the demand curve shifts by a greater amount the price increases, and the equilibrium quantity also increase.

Scenario 2: the shift in the supply curve is greater than the shift in the demand curve (shift in supply>shift in demand)

Economics homework question answer, step 1, image 2

According to the above figure, when the supply curve shifts by a greater amount the price increases, and the equilibrium quantity decreases.

 

trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 3 images

Blurred answer
Knowledge Booster
Demand and Supply Curves
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education