EBK MICROECONOMICS
EBK MICROECONOMICS
2nd Edition
ISBN: 9780134524931
Author: List
Publisher: YUZU
Question
Chapter 4, Problem 1Q
To determine

Meaning of the term “holding all else equal”, and its application in the movement of demand and supply curves.

Expert Solution & Answer
Check Mark

Explanation of Solution

The term is used to explain that an action takes place assuming that all the other factors, which have the potential to influence the demand and supply for a particular service or good, do not change or remain constant.

When discussing the movements in supply and demand curves, if all the other factors influencing demand and supply are held constant, a change in price will cause the equilibrium level of price and quantity to change along the supply or demand curve.

The following graphs explain such movements along the supply curve and the demand curve, respectively.

EBK MICROECONOMICS, Chapter 4, Problem 1Q

Observe the change in the price and the quantity demanded/supplied, while assuming the other factors, which have an effect on demand and supply, continue to stay the same and do not bring change in demand or supply.

An increase in price causes the supply curve to move upwards causing the supplied quantity to increase. There is a downward movement when price falls for the supply curve.

A decrease in price causes the demand curve to move downwards, which can be seen from the diagram, causing the demanded quantity to increase. The demand curve moves upwards when prices rise.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Knowledge Booster
Recommended textbooks for you
  • Microeconomics A Contemporary Intro
    Economics
    ISBN:9781285635101
    Author:MCEACHERN
    Publisher:Cengage
    Brief Principles of Macroeconomics (MindTap Cours...
    Economics
    ISBN:9781337091985
    Author:N. Gregory Mankiw
    Publisher:Cengage Learning
    Principles of Economics 2e
    Economics
    ISBN:9781947172364
    Author:Steven A. Greenlaw; David Shapiro
    Publisher:OpenStax
  • MACROECONOMICS FOR TODAY
    Economics
    ISBN:9781337613057
    Author:Tucker
    Publisher:CENGAGE L
    Economics For Today
    Economics
    ISBN:9781337613040
    Author:Tucker
    Publisher:Cengage Learning
    Micro Economics For Today
    Economics
    ISBN:9781337613064
    Author:Tucker, Irvin B.
    Publisher:Cengage,
  • Microeconomics A Contemporary Intro
    Economics
    ISBN:9781285635101
    Author:MCEACHERN
    Publisher:Cengage
    Brief Principles of Macroeconomics (MindTap Cours...
    Economics
    ISBN:9781337091985
    Author:N. Gregory Mankiw
    Publisher:Cengage Learning
    Principles of Economics 2e
    Economics
    ISBN:9781947172364
    Author:Steven A. Greenlaw; David Shapiro
    Publisher:OpenStax
    MACROECONOMICS FOR TODAY
    Economics
    ISBN:9781337613057
    Author:Tucker
    Publisher:CENGAGE L
    Economics For Today
    Economics
    ISBN:9781337613040
    Author:Tucker
    Publisher:Cengage Learning
    Micro Economics For Today
    Economics
    ISBN:9781337613064
    Author:Tucker, Irvin B.
    Publisher:Cengage,