Another supply and demand puzzle
The market price of pizzas in 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 several pizza parlors in the area have recently gone out of business. Other students attribute the increase in the price of pizzas to a recent decrease in the price of beer.
Everyone agrees that the decrease in the price of beer was caused by a recent decrease in the price of grain, which is not generally used in making pizzas.
The first group of students thinks the increase in the price of pizzas is due to the fact that several pizza parlors in the area have recently gone out of business.
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:
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.
Supply
Demand
QUANTITY (Pizzas)