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. Equilibrium Object Scenario 1 Price Quantity Change in Equilibrium Objects Scenario 2 When Shift Magnitudes Are Unknown 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. True False 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 (Dollars per pen) + 2 1 10 9 8 Scenario 1 Supply Demand -0- Supply Demand 0 + 0 1 2 3 4 5 6 7 8 9 10 QUANTITY (Milions 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. PRICE (Dollars per pen) 1 10 9 8 Scenario 2 Supply Demand Demand 0 + 0 1 2 3 4 5 6 7 8 9 10 QUANTITY (Milions of pens) --- Supply 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.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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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.
Equilibrium Object
Scenario 1
Price
Quantity
Change in Equilibrium Objects
Scenario 2
When Shift Magnitudes Are Unknown
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.
True
False
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. Equilibrium Object Scenario 1 Price Quantity Change in Equilibrium Objects Scenario 2 When Shift Magnitudes Are Unknown 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. True False
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 (Dollars per pen)
+
2
1
10
9
8
Scenario 1
Supply
Demand
-0-
Supply
Demand
0
+
0
1
2
3
4
5
6
7
8
9
10
QUANTITY (Milions 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.
PRICE (Dollars per pen)
1
10
9
8
Scenario 2
Supply
Demand
Demand
0
+
0
1
2
3
4
5
6
7
8
9
10
QUANTITY (Milions of pens)
---
Supply
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.
Transcribed Image Text: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 (Dollars per pen) + 2 1 10 9 8 Scenario 1 Supply Demand -0- Supply Demand 0 + 0 1 2 3 4 5 6 7 8 9 10 QUANTITY (Milions 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. PRICE (Dollars per pen) 1 10 9 8 Scenario 2 Supply Demand Demand 0 + 0 1 2 3 4 5 6 7 8 9 10 QUANTITY (Milions of pens) --- Supply 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.
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