APMacro: Supply Demand and Equilibrium


A market moves to a new equilibrium when there is a shift in either supply (STORES) or demand (TOESIS) which changes the equilibrium price and quantity.

Demand Shifts

 

A change in quantity demanded is a movement along the demand curve and can be caused only by a change in the price of the good or service. A change in demand is a shift in the curve whereby more or less is demanded at every price. Changes in preferences incomes, expectations, population, or the prices of complementary or substitute goods will cause a change in demand.

Demand increases = price increases and quantity increases
Demand decreases = price decreases and quantity decreases
 

 

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Supply Shifts

 

A change in quantity supplied is a movement along the supply curve and can be caused only by a change in the price of the good or service. A change in supply is a shift of the curve whereby more or less is supplied at every price. A change in government action, technology, in production costs, expectations, or in the number of sellers (firms) will cause a change in supply.

Supply increases = price decreases and quantity increases
Supply decreases = price increases and quantity decreases

 

 

 

Arrows-02-june

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