D2 is now the relevant demand curve at 300 per

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Unformatted text preview: lated goods, number of buyers, and future price.) The demand curve shifts to the right, from D1 to D2. D2 is now the relevant demand curve. At $300 per television, the quantity demanded (using the new demand curve, D2) is 300,000, and the quantity supplied (using the one and only supply curve, S1) is 200,000. EXH I BIT 6 -3 Changes in the Equilibrium Price of Television Sets S1 An increase in demand brings about a rise in equilibrium price. 2 $400 1 $300 S1 Price Price A change in equilibrium price can be brought about by (a) an increase in demand, (b) a decrease in demand, (c) an increase in supply, or (d) a decrease in supply. Because the quantity demanded is greater than quantity supplied, a shortage exists in the television market. Price then begins to rise. As it does, the television market moves to point 2, where it is in equilibrium again. The new equilibrium price is $400. We conclude that an increase in the demand for a good will increase price, all other things remaining the same. Now suppose the demand for television sets decreases as in Exhibit 6-3(b). The demand curve shifts to the left, from D1 to D2. At $300, the quantity demanded (using the new demand curve, D2) is 100,000, and the quantity supplied (again using S1) is 200,000. Because quantity supplied is greater than quantity demanded, a surplus exists. Price begins to fall. As it does, the television A decrease in demand brings about a fall in equilibrium price. 1 $300 2 $200 D2 D1 0 100 200 300 400 D2 500 0 600 100 200 300 D1 400 500 Quantity (thousands) (a) (b) S2 S1 S1 S2 2 $400 Price $300 2 $200 Price An increase in supply brings about a fall in equilibrium price. 1 1 $300 A decrease in supply brings about a rise in equilibrium price. D1 D1 0 600 Quantity (thousands) 100 200 300 400 500 600 0 100 200 300 400 500 Quantity (thousands) Quantity (thousands) (c) (d) 134 Chapter 6 Price: Supply and Demand Together 600 06 (128-153) EMC Chap 06 11/21/05 3:13 PM Page 135 Do You Speak Economics? ?????????????????? V arious language trans...
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This document was uploaded on 01/16/2014.

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