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Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364

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BuyFindarrow_forward

Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364
Textbook Problem

Whether the product market or the labor market, what happens to line equilibrium price and quantity for each of the four possibilities: increase in demand, decrease in demand, increase in supply; and decrease in supply.

To determine

Show the effects of the following situations on equilibrium price and quantity:

(a) Increase in demand

(b) Decrease in demand

(c) Increase in supply

(d) Decrease in supply.

Explanation

(a) An increase in demand means the demand curve for the goods and services shift rightward from D to D’. As a result price rises from P to P’ and quantity rises from Q to Q’ in the market.

(b) A decrease in demand means the demand curve for goods and services will shift to left from D to D’. As a result price declines from P to P’ and quantity decreases from Q to Q’.

(c) An increase in supply will shift the supply curve for goods and services to right from S to S’...

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