The market price of calzones in a college town decreased recently, and the students in an economics class are debating the cause of the price decrease. Some students suggest that the price decreased because several new pizza parlors have recently opened in the area. Other students attribute the decrease in the price of calzones to a recent increase in the price of beer. Everyone agrees that the increase in the price of beer was caused by a recent increase in the price of hops, which are not generally used in making calzones.

The first group of students thinks the decrease in the price of calzones is due to the fact that several new pizza parlors have recently opened in the area.

#1 On the following graph, adjust the supply and demand curves to illustrate the first group’s explanation for the decrease in the price of calzones.

Supp Supply Demand QUANTITY (Calzones)

#2 The second group of students attributes the decrease in the price of calzones to the increase in the price of beer.

On the following graph, adjust the supply and demand curves to illustrate the second group’s explanation for the decrease in the price of calzones.