The first group of students thinks the increase in the price of pizzas is due to the fact that the price of dough, an important ingredient for makingpizzas, has increased.On the following graph, adjust the supply and demand curves to illustrate the first group's explanation for the increase in the price of pizzas.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.SupplyDemandSupplyDemandQUANTITY (Pizzas)MacBook AirPRICE (Dollars per pizza) The second group of students attributes the increase in the price of pizzas to the increase in the price of hamburgers at local burger 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 pizzas.(?SupplyDemandSupplyDemandQUANTITY (Pizzas)Suppose that both of the events you have just analyzed are partly responsible for the increase in the price of pizzas. Based on your analysis of theexplanations offered by the two groups of students, how would you figure out which of the possible causes was the dominant cause of the increase inthe price of nizzas?MacBook AirPRICE (Dollars per pizza)

Answered: The second group of students attributes…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The first group of students thinks the increase in the price of pizzas is due to the fact that the price of dough, an important ingredient for making
pizzas, has increased.
On the following graph, adjust the supply and demand curves to illustrate the first group's explanation for the increase in the price of pizzas.
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.
Supply
Demand
Supply
Demand
QUANTITY (Pizzas)
MacBook Air
PRICE (Dollars per pizza)

The second group of students attributes the increase in the price of pizzas to the increase in the price of hamburgers at local burger 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 pizzas.
(?
Supply
Demand
Supply
Demand
QUANTITY (Pizzas)
Suppose that both of the events you have just analyzed are partly responsible for the increase in the price of pizzas. Based on your analysis of the
explanations offered by the two groups of students, how would you figure out which of the possible causes was the dominant cause of the increase in
the price of nizzas?
MacBook Air
PRICE (Dollars per pizza)

Expert Solution

Clarifying the concepts

When left to the self-adjusting market forces of demand and supply, an equilibrium level of quantity demanded and supplied at a certain price level is reached automatically.

The demand curve, representing the inverse relationship of the quantity demanded of a commodity at a certain price level, tends to hold with other factors held constant.

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