I have read the material for Chapter 3: "Supply and Demand" located in Michael Parkin's book titled, "Economics" (8th ed.). From my readings, I understand that as the prices rises supply increases. I also understand that as demand increases supply increases. However, I have trouble understanding the concepts concerning equilibrium price, when the equilibrium price is prone to rise or fall, and under what conditions will equilibrium quantity increase or decrease?
In the attachment, there is a problem that asks me to determine hypothetically what will happen in a foreign market concerning the supply and demand of steel. It is rather difficult to address the problem when my understanding becomes cloudy. Could you please explain the concept in detail so that I can understand the material and problem better? Any tips that you offer will greatly be appreciated.
Here are my questions:
In relation to China's steel production expansion, the market is for steel. Three questions arise: 1). Which of the curves shifts in which direction? 2). Does the equilibrium price rise or fall? 3). Does the equilibrium quantity increase or decrease?
This post assesses equilibrium quantity.