Solve it! 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 ink, 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 backto its original position, just drag it a little farther.PRICE (Dollars per pen)10982100 12Scenario 13SupplyDemand4567QUANTITY (Millions of pens)8910DemandSupply 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 1graph.PRICE (Dollars per pen)1098732100Price1Equilibrium ObjectQuantity2TrueScenario 2■1IFalseSupply3 4567QUANTITY (Millions of pens)DemandScenario 1IncreasesDecreases8Compare 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 pens.9Use 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.10中翼中国DemandIncreasesSupplyIncreases?Change in Equilibrium ObjectsScenario 2When Shift Magnitudes Are UnknownIncreasesTrue or False: When both the demand and supply curves shift, the curve that shifts by the smaller magnitude determines the effect on theundetermined equilibrium object.Cannot determine

The point of equilibrium shows a theoretical state of rest where all economic transactions that…

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) 10 9 8 2 1 0 0 + 1 2 Scenario 1 3 Supply Demand 4 7 5 6 QUANTITY (Millions of pens) 8 9 10 Demand Supp

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) 10 9 8 2 1 0 0 + 1 2 Scenario 1 3 Supply Demand 4 7 5 6 QUANTITY (Millions of pens) 8 9 10 Demand Supp

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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 ink, 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)
10
9
8
2
1
0
0 1
2
Scenario 1
3
Supply
Demand
4
5
6
7
QUANTITY (Millions of pens)
8
9
10
Demand
Supply

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)
10
9
8
7
3
2
1
0
0
Price
1
Equilibrium Object
Quantity
2
True
Scenario 2
■
1
I
False
Supply
3 4
5
6
7
QUANTITY (Millions of pens)
Demand
Scenario 1
Increases
Decreases
8
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.
9
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.
10
中翼中国
Demand
Increases
Supply
Increases
?
Change in Equilibrium Objects
Scenario 2
When Shift Magnitudes Are Unknown
Increases
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.
Cannot determine

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