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