Question about supply and demand curves?
Answer:
I think the best way is to derive the supply and demand curves separately. Once you do that, you realize that it is demand and supply that determine the market price.
The demand curve is downward sloping because of common sense: the lower the price the more you want of the good. The supply curve is upward sloping because we assume the firm is producing from an optimal mix of inputs and any more will mean it will be somewhat more expensive to produce the extra amount. Often increasing output means workers have to work overtime, or if add workers there is less space for them to work and the extra work is slightly less efficient.
But you have something funny going on. There is no supply at the market price. No one is willing to supply at that price. Thus the price has to rise until suppliers wish to sell at the market price.
So, what happened was there was a increase in Demand (shift right demand curve). The price was 'stuck' and so you had a shortage. The price will rise up and demand will fall, filling the shelves and people will buy the products. The supply curve is unchanged.
Demand = price goes up less people will be intrested so the demand goes down. (price on y-axis demand on bottom = left to right downslope)
Supply = same or goes down becasue they might be selling all their supplies or there might a possibility they are not because less people are buying. (could be flat line at 100$ or downslope)
There is not enough information here to determine either of those. Assuming that there was a supply of toys before they sold out, the supply has decreased since then, which means that the supply has shifted to the left.
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