The following two graphs depict the equilibrium price of a pound of grapes in California and West Virginia, respectively. Assume the type and quality of the grapes being sold in the two states are identical. Further, assume grape sellers incur zero costs to transport grapes between the two states and there are no other barriers to trade. Use these graphs to answer the next questions.

- According to the law of one price, the supply curve in the California grape market will shift to the ________, and the supply curve in the West Virginia grape market will ________.

Question

The following two graphs depict the equilibrium price of a pound of grapes in California and West Virginia, respectively. Assume the type and quality of the grapes being sold in the two states are identical. Further, assume grape sellers incur zero costs to transport grapes between the two states and there are no other barriers to trade. Use these graphs to answer the next questions.
 
- According to the law of one price, the supply curve in the California grape market will shift to the ________, and the supply curve in the West Virginia grape market will ________.

Quizplus · Accepted Answer

According to the law of one price, if the price of grapes is higher in West Virginia than in California, suppliers will move grapes from California to West Virginia. This will decrease the supply in California (shifting the supply curve to the left) and increase the supply in West Virginia (shifting the supply curve to the right).

The Following Two Graphs Depict the Equilibrium Price of a Pound