Module 7 Supply and Demand Changes in Equilibrium

Module 7 Supply and Demand: Changes in Equilibrium KRUGMAN'S MACROECONOMICS for AP* Margaret Ray and David Anderson

What you will learn in this Module: • How equilibrium price and quantity are affected when there is a change in either supply or demand • How equilibrium price and quantity are affected when there is a simultaneous change in both supply and demand

What Happens When the Demand Curve Shifts? • When demand increases, the equilibrium price and quantity both increase

What Happens When the Demand Curve Shifts? • When demand decreases, the equilibrium price and quantity both decrease

What Happens When the Supply Curve Shifts? • When supply decreases, the equilibrium price increases and the equilibrium quantity decreases

What Happens When the Supply Curve Shifts? • When supply increases, the equilibrium price decreases and the equilibrium quantity increases

Simultaneous Shifts of Supply and Demand • When demand increases and supply decreases the equilibrium price definitely increases, but quantity is ambiguous

Simultaneous Shifts of Supply and Demand • When demand decreases and supply increases the equilibrium price definitely decreases, but quantity is ambiguous

Simultaneous Shifts of Supply and Demand • When demand supply increase, the change in equilibrium price is ambiguous, but equilibrium quantity definitely increases

Simultaneous Shifts of Supply and Demand • When demand supply decrease, the change in equilibrium price is ambiguous, but equilibrium quantity definitely decreases

Figure 7. 1 Equilibrium and Shifts of the Demand Curve Ray and Anderson: Krugman’s Economics for AP, First Edition Copyright © 2011 by Worth Publishers

Figure 7. 2 Equilibrium and Shifts of the Supply Curve Ray and Anderson: Krugman’s Economics for AP, First Edition Copyright © 2011 by Worth Publishers

Figure 7. 3 Simultaneous Shifts of the Demand Supply Curves Ray and Anderson: Krugman’s Economics for AP, First Edition Copyright © 2011 by Worth Publishers