What Happen to Price and Quantity When Supply and Demand Change?

1. Mr. Rey Belen

8. PRICE QUANTITY D S Equilibrium: P has reached the level where quantity supplied equals quantity demanded

9. PRICE QUANTITY D S When quantity supplied is greater than quantity demanded SURPLUS

10. PRICE QUANTITY D S When quantity demanded is greater than quantity supplied SHORTAGE

12. PRICE OF DIESEL CARS QUANTITY OF DIESEL CARS D1 S1 Analyze the effect of: -Increase in price of gas -New technology reduces cost of producing diesel cars P1 Q1

13. D1 S1 Event to be analyze: -Increase in price of gas P1 Q1 Step 1: D curve shifts to the right The shift causes an increase in price and quantity of diesel cars P2 D2 Q2 PRICE OF DIESEL CARS QUANTITY OF DIESEL CARS

14. D1 S1 Event to be analyze: -New technology reduces cost of producing diesel cars. P1 Q1 Step 1: S curve shifts to the right The shift causes price to fall and quantity to rise P2 Q2 S2 PRICE OF DIESEL CARS QUANTITY OF DIESEL CARS

15. D1 S1 P1 Q1 P2 D2 Q2 S2 PRICE OF DIESEL CARS QUANTITY OF DIESEL CARS

16. D1 S1 P1 Q1 P2 D2 Q2 S2 PRICE OF DIESEL CARS QUANTITY OF DIESEL CARS

18. No Change in Supply An Increase in Supply A Decrease in Supply No Change in Demand P same Q same P down Q up P up Q down An Increase in Demand P up Q up P ambiguous Q up P up Q ambiguous A Decrease in Demand P down Q down P down Q ambiguous P ambiguous Q down

19. PRICE QUANTITY D1 S1 P1 Q1