Assignment:
In a 150 to 250 word post under this thread, address the following.
The law of demand states as a price of a good increases the quantity demanded decreases holding everything else constant. A change in demand occurs if one of the things held constant, such as consumer income, changes. This means the demand curve shifts. The law of supply states as a price of a good increases the quantity supplied increases holding everything else constant. A change in supply occurs if one of the things held constant, such as the price of an input, changes. This means the supply curve shifts.
Give an example where a change in supply (supply shift) brings about a change in the equilibrium values of price and quantity along a stationary demand curve. Then give a different example where a change in demand (demand shift) brings about a change in the equilibrium values of price and quantity along a stationary supply curve. Describe the changes in both equilibrium values in each of your two examples.
HINT: Assume a stationary demand curve for the first example. Assume a stationary supply curve for the second example. In each example, begin with a market that is at its equilibrium before determining what occurs in regards the new equilibrium values.)