Price Supply
What would happen to equilibrium price if supply and demand....?
demand decreases and supply is constant?
supply decreases and demand is constant?
supply increases and demand is constant?
demand increases and supply is constant?
demand decreases and supply decreases?
would the price rise/fall or remain the same for each of these
1. Lower, there will be excess supply and not enough demand to meet the supply, therefore, produces would be forced to lower their price (equilibrium) of good or service. This is what is called a 'glut' or 'overproduction', when supply is in excess.
2. Higher, now the opposite happens. When there is not enough supply to fulfill the demand. Therefore the producers would be forced to increase their price (equilibrium) so demand will decrease and ultimately supply will meet demand. This is what is called a shortage, when demand exceeds supply.
3. Lower, similar situation to scenario 1 here. Supply will exceed demand, therefore, equilibrium will shift down (price will come down). There will be an overproduction.
4. Higher, Demand exceeds supply here, shortage will occur..forcing prices up to lower demand.
5. If the decrease in the same amount, then price is at equilibrium (demand=supply) ..will stay the same.
Peak Oil: Gas Prices, Supply Depletion & Energy Crisis SHORT
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