The market price of pizza in College Town decreased recently. Some students in an economics class suggest that the price fell because several new pizza parlors opened for business in the area. Other students suggested that the decrease in the price for pizza occurred because the price of hamburgers at local burger joints had gone down.
1. Using your analysis of the explanations offered by the two groups of students, how would you identify which explanation is the dominant or main cause of the decrease in the price of pizza?
A. If the equilibrium quantity of pizza decreased, then the dominant cause must have been the supply shift in the market for pizza, caused by the opening of new pizza parlors.
B. It depends on whether the demand curve or supply curve changed first.
C. If the equilibrium quantity of pizza increased, then the dominant cause must have been the demand shift in the market for pizza caused by the decrease in the price of hamburgers.
D. If the equilibrium quantity of pizza increased, then the dominant cause must have been the supply shift in the market for pizza, caused by the opening of new pizza parlors.