Economics DEmand and Supply?
Can someone please help me answer this question:
Suppose a market is in equlibrium and both demand and supply curves increase. What happens to the equilibrium price if demand increases more than supply??
Thanks again for those who help..
Answer:
Prices go up
I believe that the price would get higher. But i am just guessing.
You need to draw your graph. Let demand curve number 2 increase meaning it moves to the right. Let supply curve number 2 increase meaning it moves to the right as well. I don't see how they are sure that prices go up. You need values for price and quantity. If you draw your graph you will see that prices stay constant and quantity increases. Because when demand goes up, prices and quantity increases. When supply goes up then prices go down quantity goes up. Both quantity goes up. So for prices you would have to say they stay constant unless you have values for price and quantity.
The prices rise.
If initially, the supply and demand are in equilibrium and both the supply and demand increase, the prices rise, and supply and demand remain in equilibrium. However, if the demand increases and the supply remains the same, the price will increase. Think about a simple candy bar. Assume that the candy bar is a good that all consumers value. If the supply remains the same, yet the demand increases, then each person wants more candy bars. Yet the supply from the manufacturer is the same. So, the firms responds by increasing the price for each candy bar. In effect, this lowers the demand for candy bars and brings the supply and demand back into equilibrium.
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Suppose a market is in equlibrium and both demand and supply curves increase. What happens to the equilibrium price if demand increases more than supply??
Thanks again for those who help..
Answer:
Prices go up
I believe that the price would get higher. But i am just guessing.
You need to draw your graph. Let demand curve number 2 increase meaning it moves to the right. Let supply curve number 2 increase meaning it moves to the right as well. I don't see how they are sure that prices go up. You need values for price and quantity. If you draw your graph you will see that prices stay constant and quantity increases. Because when demand goes up, prices and quantity increases. When supply goes up then prices go down quantity goes up. Both quantity goes up. So for prices you would have to say they stay constant unless you have values for price and quantity.
The prices rise.
If initially, the supply and demand are in equilibrium and both the supply and demand increase, the prices rise, and supply and demand remain in equilibrium. However, if the demand increases and the supply remains the same, the price will increase. Think about a simple candy bar. Assume that the candy bar is a good that all consumers value. If the supply remains the same, yet the demand increases, then each person wants more candy bars. Yet the supply from the manufacturer is the same. So, the firms responds by increasing the price for each candy bar. In effect, this lowers the demand for candy bars and brings the supply and demand back into equilibrium.
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