Consider the market for pens. Suppose that the number of students with an allergy to pencilerasers increases, causing more students to switch from pencils to pens in school. Moreover, theprice of ink, an important input in pen production, has dropped considerably.On the following graph, labeled Scenario 1, indicate the effect these two events have on thedemand for and supply of pens.Note: Select and drag one or both of the curves to the desired position. Curves will snap intoposition, so if you try to move a curve and it snaps back to its original position, just drag it a littlefarther.10102Scenario 1EquilibriumObjectPriceQuantitySupplyTrueFalseDemandQUANTITY (Mons of pens)Next, complete the following graph, labeled Scenario 2, by shifting the supply and demand curvesIn the same way that you did on the Scenario 1 graph.Scenario 2SupplyDemandQUANTITY()'0Demand9 10Scenario 1SupplyDemand(?)SupplyCompare both the Scenario 1 and Scenario 2 graphs. Notice that after completing both graphs, youcan now see a difference between them that wasn't apparent before the shifts because each graphindicates 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 complete thefollowing table. Begin by indicating the overall change in the equilibrium price and quantity afterthe shift in demand or supply for each shift-magnitude scenario. Then, in the final column, indicatethe resulting change in the equilibrium price and quantity when supply and demand shift in thedirection you previously indicated on both graphs. If you cannot determine the answer withoutknowing the magnitude of the shifts, choose Cannot determine.Change in Equilibrium ObjectsScenario 2(?)When Shift Magnitudes AreUnknownTrue or False: When both the demand and supply curves shift, the curve that shifts by the smallermagnitude determines the effect on the undetermined equilibrium object.

When the cost of production will fall then supply will increase and the supply curve will shift…

Consider the market for pens. Suppose that the number of students with an allergy to pencil erasers increases, causing more students to switch from pencils to pens in school. Moreover, the price of Ink, an important input in pen production, has dropped 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 Supply Demand

Consider the market for pens. Suppose that the number of students with an allergy to pencil erasers increases, causing more students to switch from pencils to pens in school. Moreover, the price of Ink, an important input in pen production, has dropped 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 Supply Demand

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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