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, or remain unchanged, or are the answers indeterminate because they depend on the magnitudes of the shifts?
a Supply decreases and demand is constant.
b. Demand decreases and supply is 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 is constant
g. demand increases and supply decreases
h. demand decreases and supply decreases
There are concepts that we have to internalize when it comes to supply and demand analyses. These are:
- Demand curve is downward sloping.
- Supply curve upward sloping.
- An increase in the supply is denoted by the movement of the supply curve to the right.
- A decrease in the supply is denoted by the movement of the supply curve to the left.
- An increase in the demand is denoted by the movement of the demand curve to the right.
A decrease in the demand is denoted by the movement of the demand curve to the left.
The intersection of the demand and supply curve locates the equilibrium price and ...
This solution discusses the mechanics of supply, demand, and price. A file is attached showing step-by-step guide in solving the supply and demand functions. The file has eight (8) graphical illustrations showing the dynamics of supply and demand curves.