Question

4. Suppose that the demand curve shifts to the right and the supply curve shifts to the left simultaneously (i.e., both shift at the same time). For each part, draw a single demand and supply graph (i.e., one graph for part a, another graph for part b). (You can practice with the other possibilities on your own if you want more practice with simultaneous shifts.) a. If the demand curve shifts by a greater amount than the supply curve, how do the equilibrium price and equilibrium quantity change? b. If the supply curve shifts by a greater amount than the demand curve, how do the equilibrium price and equilibrium quantity change? c. If the relative sizes of the shifts are not given, how do the equilibrium price and equilibrium quantity change? United States) Focus

Answer 1

Demand curve shifts to right supply curve shifts to left simultaneously (a) if the demand curve shifts by a grater then supply curve initial equilibrium rightarrow point E new equilibrium rightarrow point E_1 the equilibrium price will increate (from p to p_1) and equilibrium also increases (from 1 to 1) (b) if the supply curve by a grater demand then demand curve initial equilibrium rightarrow point E new equilibrium rightarrow point E_1 the equilibrium price will decreases (from p to p_1) and equilibrium also increases (from 1 to 1) (c) it the retentive size of shifts are given there equilibrium price will definitely increase but change is equilibrium by is increases it could by (in like point (a)) decreases (of like part (b))