How shifts in demand and supply change the market price. Chapter IV review

If demand or supply shifts, the D and S curves cross at a new point, that is, a new equilibrium appears. There are four basic cases. If demand rises (D right), both price and quantity rise. If demand falls (D left), both fall. If supply rises (S right), the price falls and the quantity rises. If supply falls (S left), the price rises and the quantity falls. An easy way to remember: when demand changes, price and quantity move the same way; when supply changes, they move in opposite directions. If both curves shift at once, one change is certain, while the other depends on the size of the shifts. For example, if both demand and supply rise, the quantity rises, while the price changes according to which shift is stronger. Factors such as tax, technology, income and season are behind these events.