ECON 101 - Chap 3.3: Change sin Equilibrium Price and Quantity

Four-step process to Determining Changes of Equilibrium Price and Quantity

1. Draw demand and supply model before economic change took place and mark equilibrium price and quantity

2. Decide if economic event willl effect demand or supply

3. Decide if effect causes the curve to shift to right or left

4. Identify new equilibrium and compare with the curve that didn’t shift or the initial equilibrium

Frequent Mistakes

1. Shifts in supply curve only effects prices and quantity demanded and will only move along the demand curve

2. Just because an increase in labour costs shifts the supply curve to the left, does not mean demand will shift to the right because there’s only a fraction of demand from those works

Meow

Maow

El gato

Garfield