Question

If it is quantity is moved up or down, where does the equilibrium shift? 1

Answer 1

Supply and demand curves reflect price-quantity relationships. There is equilibrium if demand is equal to supply. Small and large companies are influenced by the form of these curves and the equilibrium value, since profit is a variable in cost and number. Although the form of these curves can not be determined by a single business, the joint behavior of companies and consumers influence the curves of supply and demand for various industries.

The price and quantity of the equilibrium are influenced by upward changes in supply and demand curves. If the supply curve moves upward, which means supply decreases while demand remains constant, the price of the equilibrium increases, but the quantity decreases. Of example, when stocks of gasoline drop, prices of pumps are likely to rise. If the demand curve moves upwards, which means changes in production, the value of the equilibrium decreases and the volume increases. When refineries import more fuel, when there is no corresponding increase in demand, pump prices are likely to fall.

If the demand curve moves upward, which means that demand increases, but supply remains constant, the price and quantity of the equilibrium both rise. Pump prices, for instance, frequently increase during the summer as people drive for the weekend to their summer homes. If the demand curve shifts downwards, meaning that demand decreases, but supply remains steady, the price and quantity of the equilibrium both decreases.