13. How shifts in demand and supply affect equilibrium Consider the market for pens. Suppose that...

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13. How shifts in demand and supply affect equilibrium Consider the market for pens. Suppose that the number of students with an allergy to pendil 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 increased considerably. On the following graph, labeled Scenario 1, indicate the effect these two events have on the demand for and supply of pens. Scenario 1 s2 D, 10 QUANTITY to search

Next, e 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 w 4 mand 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 wasnt apparent before the shifts because each graph indicates different magnitudes for the supply and demand shifts in the market for pens e to search

both the 1 and 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, resulting change in the cannot determine indicate the price and quantity when supply and demand shift in the direction you previously indicated on both graphs. iIf you the answer without knowing the magnitude of the shifts, choose Cannot determine Are Quantity Continue without re to search

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