Answered: Explain how the market demand curve for…

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter4: The Market Forces Of Supply And Demand

Section: Chapter Questions

Problem 6CQQ

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Explain how the market demand curve for a ‘normal’ good will shift (i.e. left, right or no shift) in each of the following cases? What then will happen to the equilibrium price and quantity?

Example: “demand curve shifts left, equilibrium price increases, equilibrium quantity decreases”.

(a) The price of a substitute good falls

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(b) The price of a complementary good rises

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(d) There is an increase in Income

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(e) Taste increase for the good

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Definition Video Definition Point where the demand and supply curves intersect. At the equilibrium price the quantity supplied of a good is equal to the quantity demanded. When the market is not in equilibrium, market surplus or market shortage occurs. The region that is above the price equilibrium indicates market surplus and the region below the price equilibrium indicates market shortage. Video

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