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.Change in Equilibrium ObjectsScenario 1Scenario 2When Shift Magnitudes Are UnknownPrice Quantity *option Increase, Decrease, Cannot DetermineTrue or False: When both the demand and supply curves shift, the curve that shifts by the larger magnitude determines the effect on the undetermined equilibrium object. 13. How shifts in demand and supply affect equilibriumConsider the market for pens. Suppose that increased medical concerms over lead pencils have led schools to steer away from pencil use in favor ofpens. Moreover, the price of plastic, 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 backto its original position, just drag it a little farther.Scenario 110SupplyDemand7SupplyDemand113 4QUANTITY (Millions of pens)56710PRICE(Dollars per pen) 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.Scenario 210SupplyDemand7Supply4Demand21234567.10QUANTITY (Millions of pens)Compare 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.PRICE(Dollars per pen)

Demand for pens will increase because increased medical concerned over lead pencils have led school…

Answered: Use the results of your answers on both…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

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.

Change in Equilibrium Objects
Scenario 1	Scenario 2	When Shift Magnitudes Are Unknown
Price
Quantity

*option Increase, Decrease, Cannot Determine

True or False: When both the demand and supply curves shift, the curve that shifts by the larger magnitude determines the effect on the undetermined equilibrium object.

13. How shifts in demand and supply affect equilibrium
Consider the market for pens. Suppose that increased medical concerms over lead pencils have led schools to steer away from pencil use in favor of
pens. Moreover, the price of plastic, 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
10
Supply
Demand
7
Supply
Demand
1
1
3 4
QUANTITY (Millions of pens)
5
6
7
10
PRICE(Dollars per pen)

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.
Scenario 2
10
Supply
Demand
7
Supply
4
Demand
2
1
2
3
4
5
6
7.
10
QUANTITY (Millions of pens)
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.
PRICE(Dollars per pen)

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