Question: The graph shows the market for gum after the teenage population bulge has increased the demand for gum and fire has destroyed half the gum factories. The capacity has not yet been increased.

1. What is the original equilibrium price of gum? (Label this on the graph as P ₁ )
2. What is the original equilibrium quantity of gum? (Label this on the graph as Q ₁ )
3. What is the new equilibrium price of gum? (Label this on the graph as P ₂ )
4. What is the new equilibrium quantity of gum? (Label this on the graph as Q ₂ )
5. Has there been a shift or a movement along the supply curve of gum? Why?
6. Has there been a shift or a movement along the demand curve of gum? Why?
   e. Draw the arrows on the graph to indicate the change from E1 to E2
   Qty
   
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