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Figure: Shifts in Demand and Supply II
-(Figure: Shifts in Demand and Supply II) Use Figure: Shifts in Demand and Supply II.The graph shows how supply and demand might shift in response to specific events.Suppose a fall frost destroys one-third of the nation's peach crop.Which panel BEST describes how this will affect the market for vitamin B₁₂ tablets,which are a substitute in consumption for peaches?

Question

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Figure: Shifts in Demand and Supply II

-(Figure: Shifts in Demand and Supply II) Use Figure: Shifts in Demand and Supply II.The graph shows how supply and demand might shift in response to specific events.Suppose a fall frost destroys one-third of the nation's peach crop.Which panel BEST describes how this will affect the market for vitamin B₁₂ tablets,which are a substitute in consumption for peaches?

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A fall frost destroying one-third of the nation's peach crop will cause a decrease in supply for peaches, shifting the supply curve to the left. This will result in an increase in the price of peaches and a decrease in quantity demanded. As peaches and vitamin tablets are substitutes, the decrease in quantity demanded for peaches will result in an increase in demand for vitamin tablets, shifting the demand curve to the right. Therefore, panel (a) shows the increase in demand and price for vitamin tablets.

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