Figure 16.1.1
-Refer to Figure 16.1.1 above. After the shift in supply in panel (a), the higher price of movie tickets causes:
A) demand to decrease in panel (a), which feeds back into (b), causing demand to increase in panel (b).
B) demand to increase in panel (b) and a higher price, which feeds back as higher demand in panel (a).
C) demand to increase in panel (b), but not as much as an increase in demand in panel (a).
D) demand to decrease in both panels, which causes even further decreases in demand.

Question

Figure 16.1.1
-Refer to Figure 16.1.1 above. After the shift in supply in panel (a), the higher price of movie tickets causes:
A) demand to decrease in panel (a), which feeds back into (b), causing demand to increase in panel (b). 
B) demand to increase in panel (b) and a higher price, which feeds back as higher demand in panel (a). 
C) demand to increase in panel (b), but not as much as an increase in demand in panel (a). 
D) demand to decrease in both panels, which causes even further decreases in demand.

Quizplus · Accepted Answer

The higher price of movie tickets in panel (a) leads to an increase in demand in panel (b), which in turn results in a higher price and further increases demand in panel (a).