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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?
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?
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?
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?
In the scenario where both demand and supply increase, which of the following results?
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In the scenario where demand decreases and supply increases, which of the following results?
In the scenario where demand decreases and supply increases, which of the following results?
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In the scenario where both demand and supply decreases, what is the result?
In the scenario where both demand and supply decreases, what is the result?
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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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