Final answer:
Calzones' price increase in a university town is likely due to either a decrease in supply from pizza parlors closing or increased demand from lower beer prices. These situations demonstrate how supply and demand as well as the concept of complementary goods affect pricing. Price elasticity and market signals to consumers and producers also play crucial roles in these changes.
Step-by-step explanation:
The recent increase in the price of calzones in a university town can be attributed to fundamental principles of economics, specifically, the law of demand and supply. When pizza parlors go out of business, as some students speculate, the supply of calzones decreases. This supply reduction can lead to an increase in price if demand remains steady. On the other hand, the claim that the price increase is due to a decrease in the price of beer suggests a complementary good effect, where the demand for calzones increases as people might consume more of them with cheaper beer, pushing the price up.
Both scenarios highlight key economic concepts. In the former, reduced competition and supply can drive prices up while in the latter, a change in the market for related goods affects the demand for the original product. In applying real-world context, if Pete's Pizza raises prices due to higher costs like minimum wage, consumers might see pizza as less desirable compared to cheaper alternatives like tacos, demonstrating price elasticity. Moreover, price changes serve as signals to both consumers and producers in ways that shape market behaviors.