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Question
How are the equilibrium price and quantity affected when demand and supply curves shift in opposite directions?
Solution
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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