Consider the market for pens. Suppose that new research has been published stating that the process of writing, erasing, and rewriting improves, memorization, leading parents to avoid giving their children pens in favor of pencils. Further, the price of ink, a major input in the pen production process, has increased sharply.

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

Next, complete the following graph, labeled Scenario 2, by shifting the supply and demand curves in the same way that you did on the Scenario 1 graph.

Compare both the Scenario 1, and Scenario 2 graphs. Notice that after completing both graphs, you can now see a difference between them that wasn’t apparent before the shifts, because each graph indicates different magnitudes for the supply and demand shifts in the market for pens.

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** I did this question already, but not quite confident in my answers. Just need help figuring this out. Thanks.