Supply and demand : Solution set
How will each of the following changes in demand and/or supply affect equilibrium price and equilibrium quantity in a competitive market; that is do price and quantity rise, fall, remain unchanged, or are the answers indeterminate, depending on the magnitudes of the shifts in supply and demand? You should rely on a supply and demand diagram to verify answers.
a. Supply decreases and demand remains constant.
b. Demand decreases and supply remains constant.
c. Supply increases and demand is constant.
d. Demand increases and supply increases.
e. Demand increases and supply is constant.
f. Supply increases and demand decreases.
g. Demand increases and supply decreases.
h. Demand decreases and supply decreases
Solution Summary
The solution discusses the nature of supply and demand on the equilibrium price and equilibrium quantity in a competitive market.
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Active since 2006
Responses 497
"Angel, Thank you for a clear concise solution and explanation. Chuck"
"Angel, I would love to take a time series course with you ! Thanks again...one simple minded question.....you give the lag as Yt and Yt+1 in your write up obviously i can write this as between Yt and Yt-1 with no loss of rigor. C"
"Angel, Excellent thank you very much....one question how does one determine if the model is any good viz a viz the actual data? Thanks again Chuck"
"angel, 3 follow on questions: 1. in the first equation .2 Ybar=....where does the .2 come from and where does it go in subsequent equations? 2. do we assume that mu is a normal distribution and therefore the Var is 0 \3. why does n^2 not show up in the latewr equations .2"
"Angel, Thank You...very clear. C"