Question

Could Someone take note for me from this paragraph with explantation . Thank you in advance .

Changes in Equilibrium Prices and Quantities o Changes in equilibrium prices and quantities occur when market forces cause either the demand or the supply curve for a product to shift or both curves shift. These shifts occur when one or more of the factors held constant behind a given demand "Etter. "U S. Farmers Reciiscover the Allure of Tobacco "Scott Kilman, "Crop Prices Eroth Farm Subsidy Program, Wall Street Journal Online July 25, 2011.

Answer 1

Changes in equilibrium Prices and Quantities:

The equilibrium prices and quantities in a market changes when there is a shift in demand or supply curves. When any of the constant factors affecting the demand and supply curves change, these shifts occur.

Change in Demand:

The equilibrium price and quantity are determined at a point where quantity demanded is equal to quantity supplied. Hence, a shift in demand will trigger a change in supply to attain the equilibrium again at a new price and quantity. In the figure 2.9, when demand increases from D0 to D1, the equilibrium price changes from P0 to P1 and equilibrium quantity changes from Q0 to Q1. The change in demand is along the supply curve this means that a shift in demand will be matched by a corresponding shift in supply as well.

Change in Supply:

In Figure 2.10, an increase in supply shifts the supply curve rightwards. The shift in supply could be due to reasons such as changes in technology, input prices or number of suppliers. The increase in supply leads to a decrease in equilibrium price and increase in equilibrium quantity. Similarly, a decrease in supply will lead to an increase in price and a decrease in quantity.

Changes on both sides of the market:

In reality, usually both sides of the market change simultaneously and then, the equilibrium price and quantity are determined. The trends in equilibrium prices and quantities will depend on the size of the shifts of the curves and the responsiveness of either quantity demanded or supplied to changes in prices.

In most cases, the direction of the change in equilibrium price can be determined but not the equilibrium quantity which depends on the magnitude of shifts in the curve.