Now let's see what happens in all the different combinations of double shifting with supply and demand. So I've got our same steps listed here, right, we're not really going to use them on this page, but it's just that this is the same process that we've been following. But let's go ahead and start with this one here on the left. Supply is shifting to the left and demand is shifting to the left, right. I'm just going to shorten it here. Supply left, demand left as well. Alright. So let's go ahead and draw our new curves here. I will use red as usual. So our new demand curve is to the left, and remember our trick is to try and draw them as evenly in the shifts. To shift them both as evenly as possible, and you know you did that when you get a nice square shape in the middle. So I'm going to try and do that here. There we go. That was a really good one. You could see that this square came out really good in this one, and this is kind of what you're aiming for when you do this, to get this square to come out as even as possible because it's going to be really clear what is the ambiguous variable. So let's go ahead and mark our original equilibrium as the intersection of the blue lines, our new equilibrium as the intersection of the red lines, and let's go ahead and see which variable is ambiguous. So at our original price, and you can kind of already see which one's going to be ambiguous here, it seems that our price here is going to be along the same line, and let's look at our quantities. So the quantity looks like it has clearly decreased where quantity 1 was there, quantity 2 was there, and the price kind of stayed on top of each other. So that ends up being the ambiguous variable. So in here, I'm going to write p question mark q down, right. Quantity clearly decreased in this situation, but the price was ambiguous as to what happened. So let's go ahead and do the same thing here on the right, supply shifting to the right and demand shifting to the right. So the same thing, we're going to draw the curves as evenly as we can in the shifts to try and get that square shape. So there's my new supply curve. Let me draw my new demand curve. Alright. We did a pretty good one here too. You can see we got a good square. So let's go ahead and analyze our original equilibrium and our new equilibrium. So let's start with price. It looks like the price again for both of them are along just about the same line, so we're going to know that that's going to be our ambiguous variable because they kind of stayed in the same place and we can expect the other variable to have changed our quantity variable and it looks like it has. Our q1 was here, q2 is here, quantity has clearly increased. So in this situation, we have the price being ambiguous again and quantity has definitely increased. Cool? Alright, let's go on to the bottom half of the page, and I think I can fit in here for the first graph. I get lonely when I'm not on the screen left and demand is shifting to the right. So let's start with supply to the left, demand to the right, And again, we've got a pretty good square going here. So let's go ahead and mark our original equilibrium, our new equilibrium, and let's compare. So let's start with price again. Now we've got an original price here p1 and a new price here p2. So it looks like prices have clearly increased. Right? They're not landing on top of each other. Let's see what happened with quantity. We should expect something ambiguous with quantity, which it does look like that's what we're getting, right. It looks like they're right on top of each other at this quantity that's going to end up being ambiguous. So we have a clear increase in our price, but an ambiguous outcome with our quantity. We're not sure whether the quantity will go up or down, so let's go ahead and do this last one. Now supply is shifting to the right and demand is shifting to the left. So supply shifting to the right, demand shifting to the left. Pretty good. That's okay, but we did get that square shape. And let's go ahead and mark our points. So there is our original equilibrium and our new equilibrium. So at our original equilibrium, we had this price right here, p1, and what price did we have here at our new equilibrium p2. So it looks pretty clear that the price has decreased, so quantity should be our ambiguous variable, which it looks like it is. Right? They're right on top of each other. Quantity is going to be ambiguous. So we have price decreasing for sure and quantity is ambiguous. Alright. So notice what we've got in all these situations. Up here, when both move the same way, supply shifted to the left, demand shifted to the left, we've got an ambiguous price and since they both shifted to the left, it was a bad thing, quantity decreased, and in the other situation, they both shift to the right, price being ambiguous but now quantity increased with rightward shifts. And down here when they're doing opposite shifts, that's when we get an ambiguous quantity and then the price will either shift up or down. So we kind of have that going for us, but it is always going to be easier to just put it on the graph and analyze it for every problem. Alright? There's no way you get it wrong when you put it on the graph and you do the analysis. Cool? Alright. Let's go ahead and do some double shifting practice problems.
Table of contents
- 0. Basic Principles of Economics1h 5m
- Introduction to Economics3m
- People Are Rational2m
- People Respond to Incentives1m
- Scarcity and Choice2m
- Marginal Analysis9m
- Allocative Efficiency, Productive Efficiency, and Equality7m
- Positive and Normative Analysis7m
- Microeconomics vs. Macroeconomics2m
- Factors of Production5m
- Circular Flow Diagram5m
- Graphing Review10m
- Percentage and Decimal Review4m
- Fractions Review2m
- 1. Reading and Understanding Graphs59m
- 2. Introductory Economic Models1h 10m
- 3. The Market Forces of Supply and Demand2h 26m
- Competitive Markets10m
- The Demand Curve13m
- Shifts in the Demand Curve24m
- Movement Along a Demand Curve5m
- The Supply Curve9m
- Shifts in the Supply Curve22m
- Movement Along a Supply Curve3m
- Market Equilibrium8m
- Using the Supply and Demand Curves to Find Equilibrium3m
- Effects of Surplus3m
- Effects of Shortage2m
- Supply and Demand: Quantitative Analysis40m
- 4. Elasticity2h 26m
- Percentage Change and Price Elasticity of Demand19m
- Elasticity and the Midpoint Method20m
- Price Elasticity of Demand on a Graph11m
- Determinants of Price Elasticity of Demand6m
- Total Revenue Test13m
- Total Revenue Along a Linear Demand Curve14m
- Income Elasticity of Demand23m
- Cross-Price Elasticity of Demand11m
- Price Elasticity of Supply12m
- Price Elasticity of Supply on a Graph3m
- Elasticity Summary9m
- 5. Consumer and Producer Surplus; Price Ceilings and Floors3h 45m
- Consumer Surplus and Willingness to Pay38m
- Producer Surplus and Willingness to Sell26m
- Economic Surplus and Efficiency18m
- Quantitative Analysis of Consumer and Producer Surplus at Equilibrium28m
- Price Ceilings, Price Floors, and Black Markets38m
- Quantitative Analysis of Price Ceilings and Price Floors: Finding Points20m
- Quantitative Analysis of Price Ceilings and Price Floors: Finding Areas54m
- 6. Introduction to Taxes and Subsidies1h 46m
- 7. Externalities1h 12m
- 8. The Types of Goods1h 13m
- 9. International Trade1h 16m
- 10. The Costs of Production2h 35m
- 11. Perfect Competition2h 23m
- Introduction to the Four Market Models2m
- Characteristics of Perfect Competition6m
- Revenue in Perfect Competition14m
- Perfect Competition Profit on the Graph20m
- Short Run Shutdown Decision33m
- Long Run Entry and Exit Decision18m
- Individual Supply Curve in the Short Run and Long Run6m
- Market Supply Curve in the Short Run and Long Run9m
- Long Run Equilibrium12m
- Perfect Competition and Efficiency15m
- Four Market Model Summary: Perfect Competition5m
- 12. Monopoly2h 13m
- Characteristics of Monopoly21m
- Monopoly Revenue12m
- Monopoly Profit on the Graph16m
- Monopoly Efficiency and Deadweight Loss20m
- Price Discrimination22m
- Antitrust Laws and Government Regulation of Monopolies11m
- Mergers and the Herfindahl-Hirschman Index (HHI)17m
- Four Firm Concentration Ratio6m
- Four Market Model Summary: Monopoly4m
- 13. Monopolistic Competition1h 9m
- 14. Oligopoly1h 26m
- 15. Markets for the Factors of Production1h 33m
- The Production Function and Marginal Revenue Product16m
- Demand for Labor in Perfect Competition7m
- Shifts in Labor Demand13m
- Supply of Labor in Perfect Competition7m
- Shifts in Labor Supply5m
- Differences in Wages6m
- Discrimination6m
- Other Factors of Production: Land and Capital5m
- Unions6m
- Monopsony11m
- Bilateral Monopoly5m
- 16. Income Inequality and Poverty35m
- 17. Asymmetric Information, Voting, and Public Choice39m
- 18. Consumer Choice and Behavioral Economics1h 16m
3. The Market Forces of Supply and Demand
Using the Supply and Demand Curves to Find Equilibrium
Struggling with Microeconomics?
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