AP® Macroeconomics · Free response

The frozen pizza market after the price of cheese rises

write it first, then score yourself point by point

Short free-response question · four-function calculator · 5 points · about 12 minutes

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The question

Name: ______________________   Date: ____________   The frozen pizza market after the price of cheese rises (5 points)

Cheese is an input in making frozen pizza, and its price rises sharply.

Data

The frozen pizza market at the old price

Weekly quantities in an invented country's market for frozen pizza at the original equilibrium price of $6, after the price of cheese rises
Price per pizzaQuantity demanded (pizzas per week)Quantity supplied (pizzas per week)
$6500350

  1. (A) Draw a correctly labeled graph of the market for frozen pizza and show the effect of the rise in the price of cheese. Label the new equilibrium price P2 and the new equilibrium quantity Q2. [3 points]

  2. (B) Use the data in the table. Calculate the shortage at the original price of $6 after the price of cheese rises. Show your work. [1 point]

  3. (C) Explain how the shortage in part B moves the market to its new equilibrium. [1 point]