Question

Discuss the impact of the factors mentioned below on equilibrium price and quantity. 

1. shift in demand to right 

2. shift in demand to left 

3. shift in supply to right 

4. shift in supply to left.

Answer 1

1. When demand curve shifts to right (increase in demand), there will be increase in equilibrium price and increase in equilibrium quantity. This change is shown in the diagram.

2. When demand curve shift to left (decrease in demand), both equilibrium quantity and equilibrium price falls. This is shown in the diagram.

3. When supply curve shift to right (increase in supply), the equilibrium price deceases and the equilibrium quantity increases. This is given in the following diagram.

4. When supply curve shifts to left (decrease in supply), the equilibrium price increases and the equilibrium quantity decreases. This is given in the following diagram.