Unformatted text preview: because both curves shift the same direction. By process of elimination, if the supply curve and the demand curve both move right, we know quantity increases; therefore price is unknown. In the same way, if the curves move in opposite directions, quantity is unknown. * we measure quantity left to right. Example for full credit Show the effect in the market for spam, of an increase in price of electricity and a decrease in consumer income. Spam is an automatic inferior good, but since there is a decrease in consumer income, the demand curve shifts right. An increase in the price of electricity will shift the supply curve left. According to our rules, since the curves shift in opposite directions, quantity is unknown. Now we can graph....
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- Spring '08
- Supply And Demand, Chocolate chip cookie, curves shift