1. Supply and Demand – Changes in Equilibrium
AP Economics
Mr. Bernstein
Module 7:
Supply and Demand – Changes in Equilibrium
October 2017

2. AP Economics Mr. Bernstein
What Happens When the Demand Curve Shifts?
Know what caused the shift and which curve is shifting
When Demand increases, Equilibrium Price and Quantity increase

3. AP Economics Mr. Bernstein
What Happens When the Demand Curve Shifts?
Example: New car market in a recession
When Demand decreases, Equilibrium Price and Quantity decrease

4. AP Economics Mr. Bernstein
What Happens When the Supply Curve Shifts?
Example: New technology increases amount of corn grown per acre
When Supply increases, Equilibrium Price decreases but Quantity increases

5. AP Economics Mr. Bernstein
What Happens When the Supply Curve Shifts?
Example: Rising cotton prices cause jean manufacturers to reduce output
When Supply decreases, Equilibrium Price increases but Quantity decreases

6. AP Economics Mr. Bernstein
What Happens When a Supply or Demand Curve Shifts?
Know what caused the shift
Remember curve shifts are horizontal, not vertical
Curve shifts create a surplus or shortage as the prevailing price, so prices must shift to maintain equilibrium
Carefully label all curves (ie D1, D2, S1, S2, etc.) to avoid confusing effects of simultaneous shifts

7. AP Economics Mr. Bernstein
Simultaneous Shifts of Supply and Demand Curves
Example: Demand for wheat rises but Supply for wheat decreases
Equilibrium Price increases but Quantity change is ambiguous

8. AP Economics Mr. Bernstein
Simultaneous Shifts of Supply and Demand Curves
Example: Demand for Country Music decreases but Supply increases
Equilibrium Price decreases but Quantity change is ambiguous

9. AP Economics Mr. Bernstein
Simultaneous Shifts of Supply and Demand Curves
Example: Demand for snowboards increases and Supply increases
Equilibrium Price is ambiguous but Quantity change increases

10. AP Economics Mr. Bernstein
Simultaneous Shifts of Supply and Demand Curves
Example: Demand for Justin Beiber tickets decreases and Supply decreases
Equilibrium Price is ambiguous but Quantity change decreases (awww…)