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15. Another supply and demand puzzle Suppose the market price of calzones in a university town recently decreased. Economics students studying at the university are
15. Another supply and demand puzzle Suppose the market price of calzones in a university town recently decreased. Economics students studying at the university are discussing potential causes of the price decrease. One group of students theorize that the price decreased because the price of dough, an important ingredient for making calzones, has decreased. Others claim the decrease in the price of calzones is because of a recent decrease in college student enroliment. The first group of students claim the decrease in the price of calzones can be attributed to the fact that the price of dough, an important ingredient for making calzones, has decreased. On the following graph, adjust the supply and demand curves to illustrate the first group's explanation for the decrease 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. @ O Supp) Demand 2 o 5 N o Supply g w - -+ = 3 w Q i 4 = emand QUANTITY (Calzones) The second group of students attributes the decrease in the price of calzones to the decrease in college student enrollment. On the following graph, adjust the supply and demand curves to illustrate the second group's explanation for the decrease in the price of calzones. O Supply Demand O Supply PRICE (Dollars per calzone) Demand QUANTITY (Calzones)Suppose that both groups of students are on the right track, and each of the events described above are partially responsible for the decrease 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 decrease in the price of calzones? O O O Whichever change occurred first must have been the primary cause of the change in the price of calzones. If the price decrease was large, then the supply shift in the market for calzones must have been larger than the demand shift. If the equilibrium quantity of calzones decreases, then the supply shift in the market for calzones must have been larger than the demand shift. If the equilibrium guantity of calzones decreases, then the demand shift in the market for calzones must have been larger than the supply shift
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