with Lee’s logic, and then read the answer that follows.

Answer:Lee’s first step is correct: that is, a drought shifts back the supply curve of wheat and leads to a prediction

of a lower equilibrium quantity and a higher equilibrium price. This corresponds to a movement along the original
demand curve (D0), from E0 to E1. The rest of Lee’s argument is wrong, because it mixes up shifts in supply with
quantity supplied, and shifts in demand with quantity demanded. A higher or lower price never shifts the supply
curve, as suggested by the shift in supply from S1 to S2. Instead, a price change leads to a movement along a given
supply curve. Similarly, a higher or lower price never shifts a demand curve, as suggested in the shift from D0 to D1.
Instead, a price change leads to a movement along a given demand curve. Remember, a change in the price of a

good never causes the demand or supply curve for that good to shift.
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