For the following situations determine how the offered changes to supply and demand will affect the market-clearing price and quantity of each good. Your possible answers are “increases”, “decreases”, and “uncertain/not enough information”. (e.g. “price: uncertain, quantity: increase”)
The supply and demand for pizza increase simultaneously.
The supply of widgets decreases while demand increases.
A binding price ceiling on doo-dads is imposed.
Illustrate each of the above situations with a supply and demand graph being sure to label the “before” price/quantity and the “after” price/quantity.