Transcript Equilibrium frm shift

Demand Shifts And Supply
Shifts
DEMAND CURVE SHIFTS TO RIGHT
DEMAND CURVE SHIFTS TO LEFT
SUPPLY CURVE SHIFTS TO RIGHT
SUPPLY CURVE SHIFTS TO LEFT
BOTH CURVES SHIFT
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DEMAND SHIFT {RIGHTWARD}
D
S
D
S
E1
P1
E
P
E
P
Q
Q
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Q1
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DEMAND SHIFT
{RIGHTWARD}
• WHEN DEMAND CURVE
SHIFTS TO RIGHT
{INCREASE} PRICE OF
THE COMMODITY AND THE
QUANTITY EXCHANGED
ALSO INCREASES
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DEMAND SHIFT
• When demand increases there will be
competition among buyers. As a
result price will increase.
• At increased price quantity supplied
will also increase leading to increase
in equilibrium quantity.
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Increase in demand
D
P
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DEMAND SHIFT {LEFTWARD}
D
S
D
S
E
E
P
P
P1
E1
Q1
Q
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Q
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DEMAND SHIFT
{LEFTWARD}
• WHEN DEMAND CURVE
SHIFTS TO LEFT
{DECREASE} PRICE OF
THE COMMODITY AND THE
QUANTITY EXCHANGED
ALSO DECREASES
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DEMAND SHIFT
• When demand decreases there will
be competition among sellers. As a
result price will fall.
• At reduced price quantity supplied
will also decrease leading to
decrease in equilibrium quantity.
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Decrease in demand
D
P
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s
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SUPPLY SHIFTS
{RIGHTWARD}
D
E
P
S
D
S
S1
E
P
P1
Q Q1
Q
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SUPPLY SHIFTS
{RIGHTWARD}
• WHEN SUPPLY CURVE
SHIFTS TO RIGHT
{INCREASE} PRICE OF
THE COMMODITY
DECREASES AND THE
QUANTITY EXCHANGED
INCREASES
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SUPPLY SHIFT
• When Supply increases there will be
competition among Sellers. As a
result price will fall.
• At reduced price quantity demanded
will also increase leading to increase
in equilibrium quantity.
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Increase in supply
s
P
D
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SUPPLY SHIFTS
{LEFTWARD}
S1
D
E
P
S
D
S
P1
E
P
Q1
Q
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Q
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SUPPLY SHIFTS
{LEFTWARD}
• WHEN SUPPLY CURVE
SHIFTS TO LEFT
{DECREASE} PRICE OF
THE COMMODITY
INCREASES AND THE
QUANTITY EXCHANGED
DECREASES
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SUPPLY SHIFTS LEFT
• When Supply Decreases there will be
competition among buyers. As a
result price will rise.
• At increased price quantity
demanded will fall leading to
decrease in equilibrium quantity.
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Decrease in Supply
s
P
D
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BOTH SHIFT IN EQUAL
PROPORTION
D1
D
E
P
S
D
S
S1
E
P
Q Q1
Q
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BOTH SHIFT IN EQUAL
PROPORTION
• WHEN BOTH THE SUPPLY CURVE
AND THE DEMAND CURVE
INCREASES IN SAME
PROPORTION .
• NO EFFECT ON THE PRICE BUT
QUANTITY EXCHANGED
INCREASES
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SUPPLY SHIFTS MORE THAN
DEMAND
D1
D
S
D
S
E
E
P
S1
E1
P
P1
Q
Q
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Q1
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SUPPLY SHIFTS MORE
THAN DEMAND
• WHEN THE SUPPLY CURVE
INCREASES MORE
PROPORTIONATELY THAN
DEMAND CURVE.
• THE PRICE OF THE COMMODITY
DECREASES BUT QUANTITY
EXCHANGED INCREASES
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DEMAND SHIFTS MORE THAN
SUPPLY
D1
D
E
P
S
D
S
P1
S1
E
P
Q Q1
Q
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DEMAND SHIFTS MORE
THAN SUPPLY
• WHEN THE DEMAND CURVE
INCREASES MORE
PROPORTIONATELY THAN
SUPPLY CURVE.
• THE PRICE OF THE COMMODITY
INCREASES AND THE QUANTITY
EXCHANGED ALSO INCREASES
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