CHANGES IN SUPPLY AND DEMAND

CHANGES IN SUPPLY AND DEMAND - CHANGESINSUPPLYANDDEMAND

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CHANGES IN SUPPLY AND DEMAND What Happens When the Demand Curve Shifts An increase in demand is indicated by a  rightward  shift of the demand curve from  D1 to D2  At the original market price P1, this market is no longer in equilibrium: a shortage  occurs because the quantity demanded exceeds the quantity supplied  Price rises and generates an increase in quantity supplied   upward  movement  along the supply curve New equilibrium is established at point E2, with a higher equilibrium price, P2,  and higher equilibrium quantity, Q2 When demand for a good or service increases, the equilibrium price and the   equilibrium quantity of the good or service both rise When the demand for a good or service decreases, the equilibrium price and the   equilibrium quantity of the good or service both fall What Happens When the Supply Curve Shifts When supply of a good or service decreases, the equilibrium price of the good or  
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This note was uploaded on 03/16/2012 for the course ECON 101 taught by Professor Hansen during the Fall '07 term at Wisconsin.

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CHANGES IN SUPPLY AND DEMAND - CHANGESINSUPPLYANDDEMAND

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