Question

What happens to equilibrium price and quantity in the following scenarios? Circle the correct answer for...

  1. What happens to equilibrium price and quantity in the following scenarios? Circle the correct answer for each scenario below.

  1. Supply shifts right

PRICE ->          GOES UP                     GOES DOWN              UNDETERMINED

QUANTITY -> GOES UP                     GOES DOWN              UNDETERMINED

  1. Demand decreases

PRICE ->          GOES UP                     GOES DOWN              UNDETERMINED

QUANTITY -> GOES UP                     GOES DOWN              UNDETERMINED

  1. Demand and supply both increase

PRICE ->          GOES UP                     GOES DOWN              UNDETERMINED

QUANTITY -> GOES UP                     GOES DOWN              UNDETERMINED

  1. Demand shifts left and supply shifts right

PRICE ->          GOES UP                     GOES DOWN              UNDETERMINED

QUANTITY -> GOES UP                     GOES DOWN              UNDETERMINED

  1. A very large shift to the right in demand is accompanied by a very small shift to the left in supply (assume curves have equal magnitude of slope)

PRICE ->          GOES UP                     GOES DOWN              UNDETERMINED

            QUANTITY -> GOES UP                     GOES DOWN              UNDETERMINED

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