Supply and Demand Shifts

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Questions and Answers

In a scenario with no change in demand or supply, what is established at the intersection of the supply and demand curves?

  • Minimum cost
  • Surplus
  • Maximum profit
  • Equilibrium (correct)

What happens to the demand curve when there is an increase in demand?

  • The curve remains the same
  • The curve becomes vertical
  • The curve shifts to the right (correct)
  • The curve shifts to the left

What happens to the supply curve when there is an increase in supply?

  • The curve shifts to the right (correct)
  • The curve shifts to the left
  • The curve becomes vertical
  • The curve remains the same

In the scenario where both demand and supply increase, which of the following results?

<p>The equilibrium quantity always increases (C)</p> Signup and view all the answers

In the scenario where demand decreases and supply increases, which of the following results?

<p>The equilibrium price always decreases (A)</p> Signup and view all the answers

In the scenario where both demand and supply decreases, what is the result?

<p>The equilibrium quantity decreases (C)</p> Signup and view all the answers

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Study Notes

  • These notes describe the effects of possible changes in demand and supply.

No Change in Demand or Supply

  • The demand and supply curves intersect at the equilibrium point.

Increase in Demand

  • The demand curve shifts to the right.
  • The equilibrium price and quantity increase.

Decrease in Demand

  • The demand curve shifts to the left.
  • The equilibrium price and quantity decrease.

Increase in Supply

  • The supply curve shifts to the right.
  • The equilibrium price decreases and quantity increases.

Increase in Both Demand and Supply

  • Both demand and supply curves shift to the right.
  • The equilibrium quantity increases, but the change in equilibrium price is uncertain.

Decrease in Demand; Increase in Supply

  • The demand curve shifts to the left, and the supply curve shifts to the right.
  • The equilibrium price decreases, but the change in equilibrium quantity is uncertain.

Decrease in Supply

  • The supply curve shifts to the left.
  • The equilibrium price increases and quantity decreases.

Increase in Demand; Decrease in Supply

  • The demand curve shifts to the right, and the supply curve shifts to the left.
  • The equilibrium price increases, but the change in equilibrium quantity is uncertain.

Decrease in Both Demand and Supply

  • Both demand and supply curves shift to the left.
  • The equilibrium quantity decreases, but the change in equilibrium price is uncertain.

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