15. Another supply and demand puzzle

Suppose the market price of chicken wings 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 the price of chicken, an important ingredient for making chicken wings, has increased. Others claim the increase in the price of chicken wings is because of a recent increase in college student enrollment.

The first group of students claim the increase in the price of chicken wings can be attributed to the fact that the price of chicken, an important ingredient for making chicken wings, 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 chicken wings.

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.

DemandSupplyPRICE (Dollars per chicken wing)QUANTITY (Chicken wings)DemandSupply

The second group of students attributes the increase in the price of chicken wings to the increase in college student enrollment.

On the following graph, adjust the supply and demand curves to illustrate the second group's explanation for the increase in the price of chicken wings.

DemandSupplyPRICE (Dollars per chicken wing)QUANTITY (Chicken wings)DemandSupply

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 chicken wings. 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 chicken wings?

If the price increase was small, then the supply shift in the market for chicken wings must have been larger than the demand shift.

If the equilibrium quantity of chicken wings decreases, then the demand shift in the market for chicken wings must have been larger than the supply shift.

If the equilibrium quantity of chicken wings decreases, then the supply shift in the market for chicken wings 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 chicken wings.