b) shifts in equilibrium price and quantity

d) the use of supply and demand diagrams to show how shifts in demand and supply curves cause the equilibrium price and quantity to change in real world situations

shift in demand or supply curve = change in equilibrium price and quantity

• demand curve shifts left

  • excess supply

  • firms decrease prices

  • contraction in quantity supplied + extension in quantity demanded

  • equilibrium price decreases + equilibrium quantity decreases

• demand curve shifts right

  • excess demand

  • firms increase prices

  • contraction in quantity demanded + extension in quantity supplied

  • equilibrium price increases + equilibrium quantity increases

• supply curve shifts left

  • excess demand

  • firms increase prices

  • contraction in quantity demanded + extension in quantity supplied

  • the equilibrium price increases and equilibrium quantity decreases

• supply curve shifts right

  • excess supply

  • firms decrease prices

  • contraction in quantity supplied + extension in quantity demanded

  • the equilibrium price decreases and equilibrium quantity increases