-The above figure shows the supply and demand curves for rice in the U.S.and in Japan.Assume there is no trade between the two countries.If bad weather causes the supply curves in each country to shift leftward by the same amount,then
A) the price will increase the same amount in both countries.
B) the price will decrease the same amount in both countries.
C) the price will increase more in Japan than in the U.S.
D) the price will decrease more in Japan than in the U.S.

Question

-The above figure shows the supply and demand curves for rice in the U.S.and in Japan.Assume there is no trade between the two countries.If bad weather causes the supply curves in each country to shift leftward by the same amount,then
A) the price will increase the same amount in both countries. 
B) the price will decrease the same amount in both countries. 
C) the price will increase more in Japan than in the U.S. 
D) the price will decrease more in Japan than in the U.S.

Quizplus · Accepted Answer

A leftward shift in the supply curve represents a decrease in supply. Given the same decrease in supply in both countries, the country with the steeper demand curve (indicating less elasticity, or a greater change in price for a given change in quantity) will experience a larger price increase. Typically, this would be Japan if its demand for rice is less elastic than in the U.S.

-The Above Figure Shows the Supply and Demand Curves for Rice