How do I shift the curves The accompanying supply and demand
How do I shift the curves?
The accompanying supply and demand graph represents a hypothetical market for spaghetti pasta. Demonstrate how an increase in the price of penne, a different type of pasta, and a decrease in the price of meatballs will affect the supply and demand of spaghetti pasta. Assume that producers of spaghetti pasta do not also produce penne. Market for Spaghetti Pasta ScrollSolution
1) Increase in price of penne . Decrease in price of meatballs .
Penne pasta is a substitute for spaghetti pasta . They are just two variants of pasta . So increase in price of penne will lead to decrease in demand for penne . So it will cause increase in demand for spaghetti pasta . People will shift from penne to spaghetti . So the demand curve shifts right .
Now meatballs are complimentary to pasta . Pasta is usually served with meatballs . So decrease in price of meatballs will increase demand for pasta . People will consume more pasta since the complimentary good meatballs is now cheaper . So the demand for spaghetti pasta again shifts right .
