Assignment Example | Topics and Well Written Essays - 500 words - 148

Assignment Example There 155 units are supplied to the market at that price. Results are shown in the table in Q.2 An increase in demand as a result of a decrease in prices without a corresponding change in supply will push the demand curve upwards and hence result to a shift of the demand curve to the right, that is, from D to D2. An increase in prices will reduce the consumer’s purchasing power and hence shift the demand curve downwards to the left; from D to D1 as shown by the arrows. An increase in prices will result to an increase in supply and this shifts the supply curve to the right from S to S2. A decrease in prices decreases supply shifting the supply curve to the left from S to S1. The shift is shown by the arrows, demand remains constant. The equilibrium moves to the left incase of a decrease in supply and to the right in case of an increase in supply. An increase in both supply and demand will expand the market resulting in an increase in both the prices of the goods and also the quantity of goods supplied and demanded. The equilibrium shifts to the right (William 12). A decrease in both demand and supply will contract the market leading to lower prices of goods and lower quantities of goods traded. Hence the equilibrium price and quantity shifts to the left (William