The equilibrium quantity increased advances in

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The equilibrium quantity increased. Advances in technology have lowered the cost of production and the supply increased. The equilibrium price decreased. The quantity demanded increased.
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CHAPTER 4 Market Equilibrium Equilibrium is when Qty Demanded = Qty Supplied
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Market Equilibrium Equilibrium is when Qty Demanded = Qty Supplied Shortage = excess demand Surplus = Excess supply CHAPTER 4 Shortage = Price rises Until market is in equilibrium Surplus = Price falls
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CHAPTER 4 Effects of Changes in Demand When equilibrium is disturbed, the market immediately begins to adjust (short-term) and eventually arrives at a NEW equilibrium (long-term)
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MARKET EQUILIBRIUM Event: A new zero-calorie sports drink is invented. To work out the effects on the market for bottled water : 1. Does the event change demand or supply? The new drink is a substitute for bottled water, so the demand for bottled water changes 1. Does the event Increase or Decrease demand or supply? The demand for bottled water decreases, the demand curve shifts leftward. 1. What are the new equilibrium price and quantity and how have they changed (increase or decrease)? What are the new equilibrium price and equilibrium quantity and how have they changed? Effects of Change in Demand … in action
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MARKET EQUILIBRIUM – Bottled Water Market Figure 4.7(b) shows the outcome. 1. A decrease in demand shifts the demand curve leftward. 2. At $1.00 a bottle, there is a surplus, so the price falls. 3. Quantity supplied decreases along the supply curve. 4. Equilibrium quantity decreases.
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MARKET EQUILIBRIUM When demand changes: The supply curve does not shift . But there is a change in the quantity supplied . Equilibrium price and equilibrium quantity change in the same direction as the change in demand.
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CHAPTER 4 Effects of Changes in Supply When equilibrium is disturbed, the market immediately begins to adjust (short-term) and eventually arrives at a NEW equilibrium (long-term)
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MARKET EQUILIBRIUM Event: Drought dries up some springs in the United States. To work out the effects on the market for bottled water : 1. Does the event change demand or supply? Drought changes the supply of bottled water. 1. Does the event Increase or Decrease demand or supply? The supply of bottled water decreases, the supply curve shifts leftward. 1. What are the new equilibrium price and quantity and how have they changed (increase or decrease)? What are the new equilibrium price and equilibrium quantity and how have they changed? Effects of Change in Demand … in action
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MARKET EQUILIBRIUM – Bottled Water Market Figure 4.8(b) shows the outcome. 1. A decrease in supply shifts the supply curve leftward. 2. At $1.00 a bottle, there is a shortage, so the price rises. 3. Quantity demanded decreases along the demand curve.
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