Equilibrium Price, Quantity and Demand and Supply
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A market is in equilibrium with equilibrium quantity Q* and equilibrium price P*.
What happens to P* if there is an decrease in demand?
What happens to Q* if there is an increase in demand and a decrease in supply?
What happens to P* if there is an increase in supply followed by a decrease in demand followed by another increase in supply?
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Solution Summary
This solution discusses what happens to the supply and demand curves and the market equilibrium for the listed scenarios. This solution is 126 words.
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What happens to P* if there is an decrease in demand?
That means demand curve shift leftward (inward) leading to decrease in both equilibrium price and equilibrium quantity. Hence P* will decrease.
What happens to Q* if there is an increase in demand and a ...
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