Question

Discuss how the equilibrium price and quantity change when a change in demand occurs and the...

Discuss how the equilibrium price and quantity change when a change in demand occurs and the supply stays constant, and when a change in supply occurs and the demand stays constant.

Homework Answers

Answer #1

Answer - When the supply is constant

1 - Demand increase - The increase in demand will shift the demand curve to right , the price will increase and so will the quantity

2 - Demand decrease - The decrease in demand will shift the demand curve to left , the price will decrease and so will the quantity

When demand is constant

1 - Supply increase - due to the increase in the supply , the supply curve will shift to right , the equlibrium price will fall and quantity will rise.

2 - Supply decreases - Due to the decrease in the supply , the supply curve will shift to left . The equilibrium price will increase and the quantity will decrease.

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