Answer to Question #186258 in Macroeconomics for asad

Question

what happens to demand supply curve if supply increase insignificantly but demand decreases significantly?

Answer 1

An insignificant increase in supply is not worth consideration but it slightly shifts the supply curve to the right which causes an imbalance in the market that is corrected by changing prices and demand. On the other hand, a significant decrease in demand is worth consideration, and it shifts the demand curve to the left. A decrease in demand and an increase in supply will cause a fall in equilibrium price, but the effect on equilibrium quantity cannot be determined.