FIGURE 3.7 Changes in demand and supply and the effects on price and quantity. The increase in demand from D to Dz in (a) increases both equilibrium price and equilibrium quantity. The decrease in demand from D, to D, in (b) decreases both equilibrium price and equilibrium quantity. The increase in supply from Sj to Sz in (c) decreases equilibrium price and increases equilibrium quantity. The decrease in supply from S3 to Są in (d) increases equilibrium price and decreases equilibrium quantity. The boxes in the top right summarize the respective changes and outcomes. The upward arrows in the boxes signify increases in equilibrium price (P) and equilibrium quantity (Q); the downward arrows signify decreases in these items. P D decrease: Pl, Q! D increase: P↑, Q↑ D3 D2 D4 DI (a) (b) Increase in de mand Decrease in demand S2 S increase: S. S3 Pl, Qt S decrease: Pt, Ql (c) Increase in supply (d) Decrease in supply

FIGURE 3.7 Changes in demand and supply and the effects on price and quantity. The increase in demand from D to Dz in (a) increases both equilibrium price and equilibrium quantity. The decrease in demand from D, to D, in (b) decreases both equilibrium price and equilibrium quantity. The increase in supply from Sj to Sz in (c) decreases equilibrium price and increases equilibrium quantity. The decrease in supply from S3 to Są in (d) increases equilibrium price and decreases equilibrium quantity. The boxes in the top right summarize the respective changes and outcomes. The upward arrows in the boxes signify increases in equilibrium price (P) and equilibrium quantity (Q); the downward arrows signify decreases in these items. P D decrease: Pl, Q! D increase: P↑, Q↑ D3 D2 D4 DI (a) (b) Increase in de mand Decrease in demand S2 S increase: S. S3 Pl, Qt S decrease: Pt, Ql (c) Increase in supply (d) Decrease in supply

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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