Studied by 4 people
When we combine the supply and demand curves we get
equillibrium price and equillibrium quantitiy
Equillibrium price
Quantity demanded=Quantity supplied
Surplus
When quantity supplied is more than quantity demanded.
Producers will lower their prices to get back to equillibrium
Shortage
When quantity demanded is greater than quality supplied
producers will raise prices to get back to equilibrium
Supply and demand analysis
Before the change
draw supply and demand
label original equilibrium price and quantity
The change
did it effect supply or demand first?
which detrminant caused the shift
draw increase and decrease]
After the change
label the new equilibrium
what happed to the price
what happened to quantity
Simoltaneously
Supply and demand both shift
Pi Qd Pd Qd
We know Q will decrease
We do not know if P will increase or decrease
Simultaneous table
Note 
Flashcard (37)