How do changes in supply or demand affect equilibrium prices and quantities exchanged
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How do changes in supply or demand affect equilibrium prices and quantities exchanged? PowerPoint PPT Presentation


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How do changes in supply or demand affect equilibrium prices and quantities exchanged?. Quantity Exchanged. It’s simple. An increase in supply or demand causes an increase in quantity exchanged. A decrease in supply or demand causes a decrease in quantity exchanged. Equilibrium Price.

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How do changes in supply or demand affect equilibrium prices and quantities exchanged?

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How do changes in supply or demand affect equilibrium prices and quantities exchanged?


Quantity Exchanged

  • It’s simple.

    • An increase in supply or demand causes an increase in quantity exchanged.

    • A decrease in supply or demand causes a decrease in quantity exchanged.


Equilibrium Price

  • It’s simple.

    • An increase in supply or a decrease in demand puts downward pressure on prices.

    • A decrease in supply or an increase in demand puts upward pressure on prices.


Changes in Supply or Demand


What has caused these prices to change?

  • Computer prices fall.

  • It is September and peach, berry, and other fruit prices rise.

  • It is the middle of salmon season and prices are rising.

  • The price of a major league baseball star’s rookie card is falling.

  • The price of artichokes rises.

  • The price of yo-yo’s falls.

  • The price of ancient statues falls.


Market Analysis


How do changes in demand affect quantity supplied?

  • A change in quantity supplied occurs in the short-run as suppliers respond to a change in the price of the product with no change in WAGTIPS.

  • If demand increases, price will rise, and suppliers will attempt to squeeze more out of their resources with no change in WAGTIPS.

  • If demand falls, price will fall, causing suppliers to supply less, with no change in WAGTIPS.

  • Change in demand causes a change in price which causes a change in quantity supplied, no change in WAGTIPS.


How do changes in supply affect quantity demanded?

  • A change in quantity demanded occurs as buyers respond to a change in the price of the product with no change in TIPSE. If supply increases, price will fall and buyers will buy more with no change in TIPSE.

  • If supply decreases, price will rise and buyers will buy less with no change in TIPSE.

  • Change in supply causes a change in price which causes a change in quantity demanded with no change in TIPSE.


Questions

  • Demand or supply?

  • Increase or decrease?

  • Equilibrium price?

  • Quantity supplied?

  • Quantity demanded?

  • Quantity exchanged?


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