Shifts in Market Equilibrium

Chapter 6 Section 2

Shortage – firms will raise prices◦ Quantity supplied will rise; quantity demanded

will fall; until both are equal Surplus – firms will lower prices

◦ Quantity supplied will fall; quantity demanded will rise; until both are equal

Moving Toward Equilibrium

Technology, Government (Taxes and Subsidies), and change in price of input

What Happens to the Supply Curve

What happens with a decrease in supply?

An Increase In Supply

The “Shortage” Problem ◦ usually the new

must-buy item What happens to

the Supply Curve What happens in a

decrease in demand?

An Increase in Demand