3.06 Market Equilibrium

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Reading Graphs Practice: Single Shifts and Simultaneous Shifts

For each of the following graphs, determine what happens to Equilibrium Price and Equilibrium Quantity when the curve shifts to D2, S2 or both.

Hints:

Watch Demonstrating Graphing Equilibrium with One Shift for help with Graphs A - D.
Watch Demonstrating Graphing Equilibrium with Simultaneous Shifts for help with Graphs E - H.
Remember: Left curves shifts = less. Right curve shifts = more.

Determine what happens to Equilibrium Price and Equilibrium Quantity when the curve shifts to D2.

See larger version of Graph A here.
1. The New Equilibrium Price: Locate the new Equilibrium by identifying the intersection of the dotted lines. Identify the correct answer that describes the new Equilibrium Price.
  1. Increases ↑
  2. Decreases ↓
  3. Indeterminate
2. The Equilibrium Quantity: Locate the new Equilibrium by identifying the intersection of the dotted lines. Identify the correct answer that describes the new Equilibrium Quantity.
  1. Increases ↑
  2. Decreases ↓
  3. Indeterminate
Answer: a. new equilibrium price increases and b. new equilibrium quantity increases.
Determine what happens to Equilibrium Price and Equilibrium Quantity when the curve shifts to D2.

See larger version of Graph B here.
1. The New Equilibrium Price: Locate the new Equilibrium by identifying the intersection of the dotted lines. Identify the correct answer that describes the new Equilibrium Price.
  1. Increases ↑
  2. Decreases ↓
  3. Indeterminate
2. The Equilibrium Quantity: Locate the new Equilibrium by identifying the intersection of the dotted lines. Identify the correct answer that describes the new Equilibrium Quantity.
  1. Increases ↑
  2. Decreases ↓
  3. Indeterminate
Answer: a. new equilibrium price decreases and b. new equilibrium quantity decreases.
Determine what happens to Equilibrium Price and Equilibrium Quantity when the curve shifts to S2.

See larger version of Graph C here.
1. The New Equilibrium Price: Locate the new Equilibrium by identifying the intersection of the dotted lines. Identify the correct answer that describes the new Equilibrium Price.
  1. Increases ↑
  2. Decreases ↓
  3. Indeterminate
2. The Equilibrium Quantity: Locate the new Equilibrium by identifying the intersection of the dotted lines. Identify the correct answer that describes the new Equilibrium Quantity.
  1. Increases ↑
  2. Decreases ↓
  3. Indeterminate
Answer: a. new equilibrium price decreases and b. new equilibrium quantity increases.
Determine what happens to Equilibrium Price and Equilibrium Quantity when the curve shifts to S2.

See larger version of Graph D here.
1. The New Equilibrium Price: Locate the new Equilibrium by identifying the intersection of the dotted lines. Identify the correct answer that describes the new Equilibrium Price.
  1. Increases ↑
  2. Decreases ↓
  3. Indeterminate
2. The Equilibrium Quantity: Locate the new Equilibrium by identifying the intersection of the dotted lines. Identify the correct answer that describes the new Equilibrium Quantity.
  1. Increases ↑
  2. Decreases ↓
  3. Indeterminate
Answer: a. new equilibrium price increases and b. new equilibrium quantity decreases.
Determine what happens to Equilibrium Price and Equilibrium Quantity when the curves shift to both S2 and D2.

See larger version of Graph E here.
1. The New Equilibrium Price: Locate the new Equilibrium by identifying the intersection of the dotted lines. Identify the correct answer that describes the new Equilibrium Price.
  1. Increases ↑
  2. Decreases ↓
  3. Indeterminate
2. The Equilibrium Quantity: Locate the new Equilibrium by identifying the intersection of the dotted lines. Identify the correct answer that describes the new Equilibrium Quantity.
  1. Increases ↑
  2. Decreases ↓
  3. Indeterminate
Answer: a. new equilibrium price increases and b. new equilibrium quantity is indeterminate.
Determine what happens to Equilibrium Price and Equilibrium Quantity when the curves shift to both S2 and D2.

See larger version of Graph F here.
1. The New Equilibrium Price: Locate the new Equilibrium by identifying the intersection of the dotted lines. Identify the correct answer that describes the new Equilibrium Price.
  1. Increases ↑
  2. Decreases ↓
  3. Indeterminate
2. The Equilibrium Quantity: Locate the new Equilibrium by identifying the intersection of the dotted lines. Identify the correct answer that describes the new Equilibrium Quantity.
  1. Increases ↑
  2. Decreases ↓
  3. Indeterminate
Answer: a. new equilibrium price decreases and b. new equilibrium quantity is indeterminate.
Determine what happens to Equilibrium Price and Equilibrium Quantity when the curves shift to both S2 and D2.

See larger version of Graph G here.
1. The New Equilibrium Price: Locate the new Equilibrium by identifying the intersection of the dotted lines. Identify the correct answer that describes the new Equilibrium Price.
  1. Increases ↑
  2. Decreases ↓
  3. Indeterminate
2. The Equilibrium Quantity: Locate the new Equilibrium by identifying the intersection of the dotted lines. Identify the correct answer that describes the new Equilibrium Quantity.
  1. Increases ↑
  2. Decreases ↓
  3. Indeterminate
Answer: a. new equilibrium price is indeterminate and b. new equilibrium quantity increases.
Determine what happens to Equilibrium Price and Equilibrium Quantity when the curves shift to both S2 and D2.

See larger version Graph H here.
1. The New Equilibrium Price: Locate the new Equilibrium by identifying the intersection of the dotted lines. Identify the correct answer that describes the new Equilibrium Price.
  1. Increases ↑
  2. Decreases ↓
  3. Indeterminate
2. The Equilibrium Quantity: Locate the new Equilibrium by identifying the intersection of the dotted lines. Identify the correct answer that describes the new Equilibrium Quantity.
  1. Increases ↑
  2. Decreases ↓
  3. Indeterminate
Answer: a. new equilibrium price is indeterminate and b. new equilibrium quantity decreases.

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