19. Table 3.4: Summary of the Market Effects When
Both Supply and Demand Shift
Hinweis der Redaktion
A supply curve shows the same information as the supply schedule. At higher prices, more cups of coffee are offered for sale.
A supply curve shifts outward (to the right) when sellers decide to offer a higher quantity for sale at the same price (or charge less for a given quantity).
A supply curve shifts backward (to the left) when sellers decide to offer a lower quantity for sale at the same price (or charge more for a given quantity).
A demand curve shows the same information as the demand schedule. At higher prices, fewer cups of coffee are demanded.
A demand curve shifts outward (to the right) when a higher quantity is demanded at the same price (or people are willing to pay more for a given quantity).
A demand curve shifts backward (to the left) when a lower quantity is demanded at the same price (or people are willing to pay less for a given quantity).
At a price of $1.40 per cup, we have a situation of surplus (the quantity supplied exceeds the quantity demanded), and there is downward pressure on price. At a price of $0.80 per cup we have a situation of shortage (the quantity demanded exceeds the quantity supplied), and there is upward pressure on price.
Equilibrium occurs when the quantity demanded equals the quantity supplied. At this point there is no upward or downward pressure on price.
An increase in supply creates a surplus, and downward pressure on price. The new equilibrium occurs at point E2, with a lower price and a higher quantity sold.
An increase in demand creates a shortage, and upward pressure on price. The new equilibrium occurs at point E2, with a higher price and a higher quantity sold.
An increase in both supply and demand moves the equilibrium to point E2. The quantity sold has clearly increased but the effect on price is ambiguous.
