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Question .
1. Draw and label a graph that depicts an upward-sloping supply curve and two linear downward-sloping demand curves in the market for Purina pet food. Label one demand curve D1 and the other demand curve D2. D1 should be steeper than D2. Both demand curves and the supply curve should intersect at the same point.
2. From the article: "Companies... are grappling with how much they can raise prices to offset higher costs for energy, raw materials and transportation..." Refer to the graph you drew to answer the previous question. Describe how an increase in the price of energy used to produce Purina pet food will shift the supply curve.
Would the shift in the supply curve cause a greater change in the price of Purina pet food if the demand curve were D1 or D2?
Would the shift in the supply curve cause a greater change in the quantity sold of Purina pet food if the demand curve were D1 or D2?
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