Consider the market for pizza using supply demand Show the

Consider the market for pizza using supply & demand. Show the effect of each of the following on the equilibrium price & quantity of pizza. Draw 2 separate graphs on the graph paper provided. Opening new pizza pariors A decrease in the price of hamburgers.

Solution

a. Equilibrium occurs where the supply and demand curves intersect at an equilibrium.

.

b. Outward shift of the demand curve because of fall in price. The downward trend in the price level is due to opening of several new pizza parlors recently. (Two graphs not possible to accommodate in this area).

*****