Answer to Question #236987 in Economics for Paul Carpenter

Question

A supply-demand graph can be described as having a demand curve that begins in the upper left and slopes downward to the lower right; and having a supply curve that begins in the lower left and slopes upward to the upper right. Using words in a narrative, please describe and explain how both the equilibrium price and quantity will change when:

a) Only supply decreases
b) Only supply increases
c) Only demand increases
d) Only demand decreases

Answer 1

A) Supply curve shifts to the left. Equilibrium price increases, equilibrium quantity decreases

B) Supply curve shifts to the right. Equilibrium price decreases, equilibrium quantity increases

C) Demand curve shifts to the right. Equilibrium price increases, equilibrium quantity increases

D) Demand curve shifts to the left. Equilibrium price decreases, equilibrium quantity decreases