Question

what is learned from a well-formulated supply and demand curve analysis?

Answer 1

A well formulated supply and demand curve analysis helps in
1. Identifying the equilibrium price and quantity. It is the point where demand and supply curves meet.Here quantity supplied meets quantity demanded. A well formulated supply and demand curve never creates consumer or supplier surplus.
2. It helps in identifying the shift in equilibrium prices due to shift in demand curve. Demand increases or decreases based on number of factors like tax cuts, rate cuts,etc.
3.It helps in identifying the shift in equilibrium prices due to shift in supply curve.Supply increases or decreases based on number of factors like tax benefits to supplier, supply shocks etc.

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