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Changes in demand and supply

In a market where equilibruim is determined by demand and supply forces, movement towards equilibrium is ensured by changes in the price of the product. Equilibrium is represented by point E in the diagram where the quantity demanded is equal to the quantity supplied.(more)

A change in any of the other determinants of demand and supply will cause a shift of the demand and supply curves.  As the demand or supply curve shifts, a movement to a new equilibrium position takes place.

In the event of an increase in demand, the demand curve will shift to the right and a movement to a new equilibrium with a higher equilibrium price and quantity occurs (more).  The opposite happens if the demand decreases (more).

An increase in supply will shift the supply curve to the right and a movement to a new equilibrium with a lower equilibrium price and a higher equilibrium quantity occurs (more).  The opposite happens if the supply decreases (more).

 

In the event of an excess demand for a product, the price will rise;  and in the event of an excess supply of the product, the price will decline.(more)

A decrease in the demand for a product will decrease the equilibrium price as well as the quantity.
True
 False    
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A decrease in the supply of a product will increase the equilibrium price as well as the quantity.
True  False    
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