How do changes in

supply or demand affect

equilibrium prices and
quantities exchanged?

Quantity Exchanged
Its

simple.

An increase in supply or demand causes

an increase in quantity exchanged.
A decrease in supply or demand causes
a decrease in quantity exchanged.

Equilibrium Price
Its

simple.

An increase in supply or a decrease in

demand puts downward pressure on
prices.
A decrease in supply or an increase in
demand puts upward pressure on prices.

Changes in Supply or
Demand

Increase in
Supply
Decrease in
Supply
Increase in
Demand
Decrease in
Demand

Impact on
Equilibrium
Price
Down

Impact on
Quantity
Exchanged
Up

Up

Down

Up

Up

Down

Down

What has caused

these prices to change?

Computer prices fall.

It is September and peach, berry, and
other fruit prices rise.
It is the middle of salmon season and
prices are rising.
The price of a major league baseball stars
rookie card is falling.
The price of artichokes rises.
The price of yo-yos falls.
The price of ancient statues falls.

Market Analysis
Change in Change in
Supply
Demand
(WAGTIP)
(TIPSE)
Increase

Equilibriu
m Price

Quantity
Supplied

Down
_________

Decrease
_________

Up

Up

Down

Down

_________
Up

Up

_________

Up
_________

Decrease
_________

Quantity
Exchange
d

_________
Up

Increase

Quantity
Demande
d

Down

Down

Down
_________

How do changes in demand

affect quantity supplied?

A change in quantity supplied occurs in the

short-run as suppliers respond to a change in
the price of the product with no change in
WAGTIPS.
If demand increases, price will rise, and
suppliers will attempt to squeeze more out of
their resources with no change in WAGTIPS.
If demand falls, price will fall, causing suppliers
to supply less, with no change in WAGTIPS.
Change in demand causes a change in price
which causes a change in quantity supplied, no
change in WAGTIPS.

How do changes in supply

affect quantity demanded?

A change in quantity demanded occurs as

buyers respond to a change in the price of
the product with no change in TIPSE. If
supply increases, price will fall and buyers
will buy more with no change in TIPSE.
If supply decreases, price will rise and
buyers will buy less with no change in
TIPSE.
Change in supply causes a change in price
which causes a change in quantity
demanded with no change in TIPSE.

Questions
Demand

or supply?
Increase or decrease?
Equilibrium price?
Quantity supplied?
Quantity demanded?
Quantity exchanged?