Start typing, then use the up and down arrows to select an option from the list. # Macroeconomics

Learn the toughest concepts covered in your Macroeconomics class with step-by-step video tutorials and practice problems.

Supply and Demand

# Supply and Demand Together: One-sided Shifts

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Demand Shifts 6m
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Supply Shifts 3m
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Okay, let's do the same thing here with supply. So now we'll hold the demand line constant and we're gonna move the supply line to the right or the left right. So let's go ahead on the graph. We'll label our axes P. And Q. We've got our downward demand and our upward supply, right? This will be D. One and S. One. And let's go ahead and use red uh to make our new supply line shifting to the right. So this could be some situation, let's say technology increased in the industry. So we've decided that the supply line is going to shift to the right. So let's go ahead and draw this on the graph. And then we'll find our prices and quantities. So I'll draw my new supply line over here as to I'm gonna do my my my square here from my new spot and my circle for my original, let's go ahead and find our original price and quantity and our new price and quantity. So supply is shifted to the right, Our original price and our original quantity here, P. One and Q. One. And now let's go to the square our new equilibrium which is somewhere around here at P. Two And Q. two. So what has happened in this situation when supply shifted to the right, we had our equilibrium price decrease and our equilibrium quantity increase. And that almost seems a little logical to me, I guess the supply shifting to the right, It's more efficient, they're able to make it a better price and uh they're able to bring more to market. I don't know, there's some logic there that kind of sits in the back of my head but it's just always easier to just see it on the graph and you can't get it wrong right, if you look at it on the graph we are gonna get it right every time. Let's do the same thing with the supply shift to the left over here. Alright, cool. Let's go ahead and label our axis. We've got price quantity, notice I do this every time because I'm trying to drill it in, we've got our downward demand D one upward supply s one. Cool. Alright. And let's go ahead and say that in this situation um our input prices increased, right, the price of gasoline increased and we use gasoline to run our machines. So we're gonna shift our supply line to the left and find our new equilibrium price and quantity. So I'm gonna draw the shift to the left here, something like that, that'll be S. Two. And let's mark our old equilibrium and our new equilibrium right here was the old one where the blue lines cross and here's the new one with the new line right there. Cool, let's compare our equilibrium. So here was our original equilibrium quantity and our original equilibrium price. And let's see what happened to the new equilibrium, we've got an equilibrium price here and equilibrium quantity here. So what happened in this case we're gonna see that the price has increased and the quantity has decreased. Cool. Alright, so these are all the different one sided shifts that we can do. Let's do some practice problems before we move on to two sided shifts. Alright, let's do it.
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Problem

If the economy booms and incomes rise, what happens in the markets for inferior goods?

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Problem

A change in which of the following will NOT shift the demand curve for ice cream?

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Problem

A decrease in _________ will cause a movement along a given supply curve, which is called a change in __________.

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Problem

Gum and mints are substitutes. If the price of gum increases, what happens in the market for mints?

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Problem

Which of the following situations would lead to an increase in the equilibrium price of carrots and a decrease in the equilibrium quantity of carrots sold?

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Problem

The discovery of a new fertilizer will shift the ___________ curve for carrots, leading to a ___________ equilibrium price. 