Assume that both the demand curve and the supply curve for DVD players shift to the left but the demand curve shifts more than the supply curve. As a result the equilibrium price of DVD players will increase; the equilibrium quantity will decrease.
How is the equilibrium of the market impacted by changes in the supply and demand curves?
The impact on price results from a shift along the supply curve rather than an abrupt change in supply. Price and quantity traded decrease as a result of an inward shift in demand. The supply elasticity determines how much the price and quantity will shift from one equilibrium to another. An equilibrium price, also known as a market clearing price, is the agreed upon price when a product transaction takes place. On a graph, this price is determined by the interaction of supply and demand.
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