module supply and demand: changes in equilibrium krugman's macroeconomics for ap* 7 margaret...

ModuleSupply and Demand:Changes in Equilibrium

KRUGMAN'SMACROECONOMICS for AP*

7

Margaret Ray and David Anderson

What you will learnWhat you will learn

in thisin this ModuleModule::

• How equilibrium price and quantity are affected when there is a change in either supply or demand

• How equilibrium price and quantity are affected when there is a simultaneous change in both supply and demand

What Happens When the What Happens When the Demand Curve Shifts?Demand Curve Shifts?

• When demand increases, the equilibrium price and quantity both increase

What Happens When the What Happens When the Demand Curve Shifts?Demand Curve Shifts?

• When demand decreases, the equilibrium price and quantity both decrease

What Happens When the What Happens When the Supply Curve Shifts?Supply Curve Shifts?

• When supply decreases, the equilibrium price increases and the equilibrium quantity decreases

What Happens When the What Happens When the Supply Curve Shifts?Supply Curve Shifts?

• When supply increases, the equilibrium price decreases and the equilibrium quantity increases

Simultaneous Shifts of Simultaneous Shifts of Supply and DemandSupply and Demand

• When demand increases and supply decreases the equilibrium price definitely increases, but quantity is ambiguous

Simultaneous Shifts of Simultaneous Shifts of Supply and DemandSupply and Demand

• When demand decreases and supply increases the equilibrium price definitely decreases, but quantity is ambiguous

Simultaneous Shifts of Simultaneous Shifts of Supply and DemandSupply and Demand

• When demand and supply increase, the change in equilibrium price is ambiguous, but equilibrium quantity definitely increases

Simultaneous Shifts of Simultaneous Shifts of Supply and DemandSupply and Demand

• When demand and supply decrease, the change in equilibrium price is ambiguous, but equilibrium quantity definitely decreases

Figure 7.1 Equilibrium and Shifts of the Demand CurveRay and Anderson: Krugman’s Economics for AP, First Edition

Copyright © 2011 by Worth Publishers

Figure 7.2 Equilibrium and Shifts of the Supply CurveRay and Anderson: Krugman’s Economics for AP, First Edition

Copyright © 2011 by Worth Publishers

Figure 7.3 Simultaneous Shifts of the Demand and Supply Curves

Ray and Anderson: Krugman’s Economics for AP, First EditionCopyright © 2011 by Worth Publishers