PRICE (Dollars per calzone) The second group of students attributes the increase in the price of calzones to the increase in the price of chicken wings at local wing joints. On the following graph, adjust the supply and demand curves to illustrate the second group's explanation for the increase in the price of calzones. QUANTITY (Calzones) Supply Demand Demand Supply Suppose that both groups of students are on the right track, and each of the events described above are partially responsible for the increase in the price of calzones. Based on your analysis of the explanations offered by the two groups of students, how would you determine which of the possible causes was the dominant cause of the increase in the price of calzones? If the equilibrium quantity of calzones increases, then the demand shift in the market for calzones must have been larger than the supply shift. If the equilibrium quantity of calzones increases, then the supply shift in the market for calzones must have been larger than the demand shift. ○ Whichever change occurred first must have been the primary cause of the change in the price of calzones. ◇ If the price increase was large, then the supply shift in the market for calzones must have been larger than the demand shift. Suppose the market price of calzones in a university town recently increased. Economics students studying at the university are discussing potential causes of the price increase. One group of students theorize that the price increased because several pizza parlors in the area have recently gone out of business. Others claim the increase in the price of calzones is because of a recent increase in the price of chicken wings at local wing joints. Everyone agrees that the increase in the price of chicken wings was caused by a recent increase in the price of chicken, which are not generally used in making calzones. Assume that pizza parlors and wing joints are entirely separate entities—that is, there aren't places that serve both calzones and chicken wings. The first group of students claim the increase in the price of calzones can be attributed to the fact that several pizza parlors in the area have recently gone out of business. On the following graph, adjust the supply and demand curves to illustrate the first group's explanation for the increase in the price of calzones. 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 calzone) QUANTITY (Calzones) 수 수 Supply Demand Demand Supply