The following graph depicts the market for potatoes in West Virginia. Assume there are similar markets for potatoes in all other U.S. states and that the potatoes sold in all states are identical. Further, assume potato sellers incur zero costs to transport potatoes between any U.S. states and that there are no other barriers to trade. Use this graph to answer the following question.
-Suppose the equilibrium price of a pound of potatoes in all U.S.states is initially $1.20.Which scenario could cause a shift in West Virginia from S₁ to S₂ as shown in the graph?

Question

The following graph depicts the market for potatoes in West Virginia. Assume there are similar markets for potatoes in all other U.S. states and that the potatoes sold in all states are identical. Further, assume potato sellers incur zero costs to transport potatoes between any U.S. states and that there are no other barriers to trade. Use this graph to answer the following question.

-Suppose the equilibrium price of a pound of potatoes in all U.S.states is initially $1.20.Which scenario could cause a shift in West Virginia from S₁ to S₂ as shown in the graph?

Quizplus · Accepted Answer

Scenario B would cause a shift of the supply curve to the left from S₁ to S₂ as shown in the graph. This is because a decrease in the supply of potatoes in other states would increase the price of potatoes in those states to $1.50, making it more profitable for potato farmers in West Virginia to sell their potatoes in other states. As a result, the quantity supplied of potatoes in West Virginia would fall, causing a leftward shift of the supply curve in West Virginia. The equilibrium price in all U.S.states would then rise to $1.50.

The Following Graph Depicts the Market for Potatoes in West