Demand for tapes需求磁带.pptVIP

Lecture 8 Market Equilibrium Analysis Market Equilibrium Price Adjustments A shortage forces the price up. A surplus forces the price down. Such price changes are mutually beneficial to both buyers and sellers. Predicting Changes inPrice and Quantity The theory we have just studies provides us with a powerful way of analyzing influences on prices and the quantities bought and sold. A change in price must be caused by either a change in demand or a change in supply. A Change in Demand An increase in demand shifts the demand curve up and to the right. The new equilibrium price and quantity are higher. You have been practicing this in EIA illustrations A Change in Supply An increase in supply shifts the supply curve to the right. The new equilibrium price is lower, but the equilibrium quantity is higher. A Change in BothDemand and Supply Both curves shift. The direction in which price and quantity change will depend on how each curve shifts. Demand and Supply Change in the Same Direction If demand and supply increase, both the demand and supply curves shift out. The new equilibrium quantity will be higher. The new equilibrium price may be higher, lower, or it may remain the same. Demand and Supply Change in Opposite Directions Suppose supply increases but demand decreases. Price falls. The direction in which quantity changes will depend on the magnitude of the shifts in the two curves. The Effects of an Increase in Both Demand and Supply The Effects of an Increase in Both Demand and Supply The Effects of an Increase in Both Demand and Supply A Change in Both Demand and Supply Prediction When both demand and supply increase, the quantity increases and the price decreases, or remains constant. When both demand and supply decreases, the quantity decreases and the price increases, decreases, or remains constant. The Effects of an Decrease in Demand and an Increase in Supply Original Quantities New Quantities (millions of tapes per week) (mi