Gravel Lawns and Steel Prices
The question
The market for gasoline-powered lawn mowers in the town of Bridgeholt is initially in equilibrium. Over a single season, thousands of Bridgeholt households tear out their grass and replace it with gravel and desert plants that never need cutting, and over the same season the world price of steel, the main material in every mower, climbs steeply. Show the effect of these two changes on the market for gasoline-powered lawn mowers in Bridgeholt. Show the effect on the Supply and Demand graph.
Drag a curve, or use the arrow buttons. Want the free-play version with every control? Open this graph in the sandbox.
Gravel Lawns and Steel Prices: the worked answer
On the Supply and Demand graph, Demand shifts left and Supply shifts left.
Why Demand shifts left and Supply shifts left
Households that replace grass with gravel no longer have anything to mow, so the number of buyers who want a mower at every price falls and the demand curve shifts left. Steel is the main input in producing mowers, so a steep rise in its price raises the per-unit cost of production and the supply curve shifts left as well. Both shifts pull the quantity traded in the same direction, so equilibrium quantity definitely decreases. The two shifts push price in opposite directions: the decrease in demand on its own would lower the price, while the decrease in supply on its own would raise it. The change in equilibrium price is therefore indeterminate, and which way it moves depends on which of the two shifts is larger.
What happens to the equilibrium
The equilibrium quantity of lawn mowers definitely decreases, while the change in equilibrium price is indeterminate because it depends on which of the two shifts is larger.
The mistake students make on this one
Almost every wrong answer here commits to both outcomes, declaring that price rises because steel got expensive, or that price falls because the buyers disappeared, and quietly demoting the other event to background detail. Both curves moved left, so their effects on price offset by an unknown amount and only quantity has a determinate direction; a smaller but real second error is claiming quantity is the indeterminate one, when quantity is the single thing this scenario does pin down.
On exam day
When both curves shift the same direction, the variable they both push (quantity here) is always the determinate one and the other never is, so do not let the more dramatic-sounding of the two events decide the price for you.
How this is graded
The checker reads every curve's position before and after your answer. You are marked correct only when Demand shifts left and Supply shifts left and every other curve on the Supply and Demand graph stays where it started — the same standard an AP reader applies to a drawn graph: the right shift, and nothing extra. There is no AI involved; the rubric is the geometry.
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