Question

If the supply curve and the demand curve both shift to the left , then the new equilibrium

Answer 1

When the demand curve and supply curve shift towards the left. the new equilibrium can be find by compare their magnitudes. which can be

1) When the decrease in demand is equal to decrease in supply, it leads to a proportionate shift of both demand and supply curve. Consequently, the equilibrium price remains the same but there is a decrease in the equilibrium quantity.

2) When the decrease in demand is greater than the decrease in supply, the demand curve shifts more towards left relative to the supply curve. Effectively, there is a fall in both equilibrium quantity and price.

3) In a case in which the decrease in demand is smaller than the decrease in supply, the leftward shift of the demand curve is less than the leftward shift of the supply curve. Notably, there is a rise in equilibrium price accompanied by a fall in equilibrium quantity.