Pharmaceutical companies have uncovered new scientific data that assists them in producing heart medicine more easily, thus making it cheaper for the consumer. (Heart medicine is market) Step 1. Draw demand and supply curves showing the market before the economic change took place. Using this diagram, find the initial equilibrium values for price and quantity. Step 2. Decide whether the economic change being analyzed affects demand or supply. In other words, does the event refer to something in the list of demand shift variables or supply shift variables? Step 3. Determine whether the effect on demand or supply causes the curve to shift to the right or to the left, and sketch the new demand or supply curve on the diagram. In other words, does the event increase or decrease the amount consumers want to buy or the amount producers want to sell? Step 4. Identify the new equilibrium, and then compare the original equilibrium price and quantity to the new equilibrium price and quantity. Draw Graph:
Pharmaceutical companies have uncovered new scientific data that assists them in producing heart medicine more easily, thus making it cheaper for the consumer. (Heart medicine is market)
Step 1. Draw demand and supply curves showing the market before the economic change took place. Using this diagram, find the initial equilibrium values for price and quantity.
Step 2. Decide whether the economic change being analyzed affects demand or supply. In other words, does the event refer to something in the list of demand shift variables or supply shift variables?
Step 3. Determine whether the effect on demand or supply causes the curve to shift to the right or to the left, and sketch the new demand or supply curve on the diagram. In other words, does the event increase or decrease the amount consumers want to buy or the amount producers want to sell?
Step 4. Identify the new equilibrium, and then compare the original
Draw Graph:
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