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The image presents an economic scenario involving the market for widgets and a change in the price of wonks. Given the context, the cross-price elasticity between widgets and wonks is 2, meaning that they are substitutes (since cross-price elasticity > 0). The price of wonks has increased, so consumers would likely switch to buying more widgets, leading to an increase in the demand for widgets.

### Analyzing the scenario:

1. **Demand (D) Shift:** Since widgets and wonks are substitutes, an increase in the price of wonks will lead to an increase in the demand for widgets. This causes a **rightward shift in the demand curve** (D → D').
   
2. **Supply (S) Shift:** There's no indication in the scenario that the supply of widgets is affected. Therefore, the **supply curve remains unchanged**.

### Outcomes on Price and Quantity:
- **Price (P):** The increased demand for widgets leads to a **higher equilibrium price**.
- **Quantity (Q):** The equilibrium quantity of widgets will also **increase** as a result of higher demand.

### Conclusion:
- **Demand shifts right (D → D').**
- **Supply stays the same (S).**
- **Price (P) increases.**
- **Quantity (Q) increases.**

Would you like any further details or clarification?

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Here are 5 related questions for further exploration:
1. What would happen if the price of wonks decreases?
2. How would the supply of widgets change if production costs for widgets fell?
3. What is the significance of cross-price elasticity in determining market relationships?
4. How might government intervention affect the widget market?
5. Could the demand shift for widgets lead to any unintended consequences in other markets?

**Tip:** Cross-price elasticity helps businesses understand how changes in the price of related goods affect the demand for their own products.

This is the market for Widgets. The cross-price elasticity between widgets and wonks is 2. The price of wonks increases.

Explore how the market for widgets responds when the price of wonks increases. Learn about cross-price elasticity (2 in this case), how demand for widgets shifts right, and its impact on equilibrium price and quantity. Perfect for undergraduate economics students.

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