2008-10-20_235423_Econ

# 2008-10-20_235423_Econ - curves to shift Here is a table...

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If the price of good increases, what happens to demand? if the price of a good decreases, what happens to supply? Does a change in price create curve shifts? Explain S P 2 P 1 P 3 D . Q 3 Q 2 Q 1 As we can see from the above graph, when the price of a good increases from P1 to P2, the Quantity Demanded decreases from Q1 to Q2. (A movement along the curve) When Price decreases from P1 to P3, the Quantity Supplied decreases from Q1 to Q3 (Again a movement along the curve). From both the above situations, we can see that change in prices causes "movements along the curves", but does not cause the curves to shift. It is when other detriments of supply and demand such as "Change in consumers' tastes and preferences, Prices of related goods. ..etc" that causes the

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Unformatted text preview: curves to shift. Here is a table that explains it all: Summary The demand curve shows what happens to the quantity demanded of a good when its price varies, holding constant all the other variables that influence buyers. When one of these other variables changes, the demand curve shifts. Table 1 lists all the variables that influence how much consumers choose to buy of a good. Supply: Summary The supply curve shows what happens to the quantity supplied of a good when its price varies, holding constant all the other variables that influence sellers. When one of these other variables changes, the supply curve shifts. Table 2 lists all the variables that influence how much producers choose to sell of a good....
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2008-10-20_235423_Econ - curves to shift Here is a table...

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