High School

Welcome to the article Consider the market for pens Suppose that increased medical concerns over lead pencils have led schools to steer away from pencil use in favor of. On this page, you will learn the essential and logical steps to better understand the topic being discussed. We hope the information provided helps you gain valuable insights and is easy to follow. Let’s begin the discussion!

Consider the market for pens. Suppose that increased medical concerns over lead pencils have led schools to steer away from pencil use in favor of pens. Moreover, the price of plastic, an important input in pen production, has dropped considerably.

On the following graph, labeled Scenario 1, indicate the effect these two events have on the demand for and supply of pens.


True or False: When both the demand and supply curves shift, you can always determine the effect on price and quantity without knowing the magnitude of the shifts.

Consider the market for pens Suppose that increased medical concerns over lead pencils have led schools to steer away from pencil use in favor of

Answer :

This is False. When both the demand and supply curves shift, the effect on price and quantity cannot always be determined solely based on the fact that both curves are shifting.

What's the demand about?

The magnitude of the shifts matters because the relative sizes of the shifts in demand and supply can lead to different outcomes.

In economics, the interaction between demand and supply determines the equilibrium price and quantity in a market. When both curves shift, the final outcome depends on how much each curve shifts and in which direction.

If only the direction of the shifts is known but not their magnitudes, the effect on equilibrium price and quantity cannot be definitively determined.

Learn more about demand

https://brainly.com/question/1245771

#SPJ3

Thank you for reading the article Consider the market for pens Suppose that increased medical concerns over lead pencils have led schools to steer away from pencil use in favor of. We hope the information provided is useful and helps you understand this topic better. Feel free to explore more helpful content on our website!

Rewritten by : Brahmana

Final answer:

An increase in health concerns over pencils and a decrease in the cost of plastic (used to make pens) would lead to both the demand and supply curves for pens to shift to the right. However, without the magnitude of these shifts, we cannot accurately predict the new equilibrium price or quantity.

Explanation:

In the scenario described, two significant factors are changing the market for pens. Firstly, greater medical concerns over lead in pencils have prompted schools to switch to pens. This would increase the demand for pens, causing the demand curve to shift to the right. Secondly, the decrease in the price of plastic, a key material for producing pens, makes pen production cheaper, resulting in an increase in supply. As a consequence, the supply curve shifts to the right as well. When considering whether you can always determine the effect on price and quantity when both demand and supply curves shift, the statement is False. Without knowing the magnitude of the shifts, it's not possible to accurately predict the new equilibrium price and quantity. If the increase in demand is larger than the increase in supply, the price may increase. If the increase in supply is greater than the increase in demand, the price may decrease. Thus, knowing just the direction of the shifts is not enough; one must also know the extent of those shifts to predict market outcomes.