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+1 vote
2.4k views
in Economics by (60.8k points)

How are the equilibrium price and quantity affected when
(a) both demand and supply curves shift in the same direction?
(b) demand and supply curves shift in opposite directions?

1 Answer

+1 vote
by (150k points)
selected by
 
Best answer

(a) both demand and supply curves shift in the same

Cases Equilibrium
Price
Equilibrium
Quantity
Figure
1)
Increase
in Dd =
Increase
in supply
Unchanged Increases
2)
Increase
in Dd
more
than
increase
SS
Increases Increases
3)
Increase
in Dd less
than
increase
in SS
Falls Increases
4)
Decrease
in Dd =
decrease
in SS
Unchanged Falls
5)
Decrease
in Dd
more
than
decrease
in SS
Falls Falls
6)
Decrease
in Dd less
than
decrease
in SS
Increases Falls

(b) demand and supply curves shift in opposite direction

Cases Equilibrium
Price
Equilibrium
Quantity
Figure
1. Increase
in Dd =
decrease in
SS
Increase Unchanged
2. Decrease
in Dd =
increase in
SS
Unchanged Increase
3. Decrease
in Dd <
increase in
supply
Decrease Increase
4. Decrease
in Dd >
increase in
supply
Decrease Decrease
5. Increase
in Dd <
decrease in
SS
Increase Decrease
6. Increase
in Dd >
decrease in
SS
Increase Increase

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