Question

Price (dollars per pizza) Quantity (millions of pizzas per year) In the above figure, the shift in the supply curve from Sto S, reflects Select one: A. an increase in the supply of pizza. O B. an increase in the quantity of pizza supplied. O C . a decrease in the quantity of pizza supplied. O O D. a decrease in the supply of pizza E. None of the above answers is correct. Two brands of water, Natural Water and Mountain Water, are close substitutes. If the price of Mountain Water decreases, the fall in price Select one: O A. increases the demand for Mountain Water. O B. increases the price of Natural Water. O C. shifts the demand curve for Natural Water leftward. O D. shifts the demand curve for Natural Water rightward. O E. More information is needed to determine if the demand curve for Natural Water shifts rightward or leftward.

Answer 1

In the above figure, the shift in the supply curve from S to S1 reflects, the leftward  shift of the supply curve which occurs when there is a decrease in the supply of pizza. Hence the answer will be: D. A decrease in the supply of pizza.

As natural water and Mountain water are close substitutes of each other, then consumer will switch from natural water to mountain water, hence the demand for natural water will fall and the demand curve for natural water will shift leftward. Hence the answer will be:

C. Shifts the demand curve for Natural Water leftward.