Question

The market price of pizzas in a college town increased recently, and the students in an economics class are debating the cause of the price increase. Some students suggest that the price increased because the price of dough, an important ingredient for making pizzas, has increased. Other students attribute the increase in the price of pizzas to a recent increase in the price of hamburgers at local burger joints.Everyone agrees that the increase in the price of hamburgers was caused by a recent increase in the price of ground beef, which is not generally used in making pizzas. Assume that pizza parlors and burger joints are entirely separate entities—that is, there aren't places that serve both pizzas and hamburgers.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.

Answer 1

Supply curve shifts to the left

Explanation:

Prices for the goods concerned:

When the amount of energy used to achieve a good increase would decrease the sellers ' propensity to provide the same volume at a given price and the supply curve shifts to the left.

Holding everything else the constant, the supply curve will shift to the inside (left), with the increased production costs representing this.

Lower costs lead to increased production, the supply curve pushed to the outside (to the right), and a large quantity will be sold by the producer at each price level.