This problem has two disturbances, so it takes two four-step analyses, one per panel. Each panel starts from the same market, D₀ and S₀, and the two diagrams are independent of each other.
Panel (a), higher compensation for postal workers. Labor compensation is a cost of production, so this is a change in supply. Higher compensation lowers the quantity supplied at every price: the supply curve shifts left, from S₀ to S₁. The new equilibrium E₁ has a lower quantity and a higher price than E₀.
Panel (b), a switch from mail to digital messages. A change in tastes is a change in demand. Fewer postal services are demanded at every price: the demand curve shifts left, from D₀ to D₁. The new equilibrium E₂ has a lower quantity and a lower price than E₀.
Both shifts reduce the quantity, but they push the price in opposite directions. Combining them is the final step, shown in the next figure.