3.3 Changes in Equilibrium Price and Quanitity: The Four Step Process

Question 1

What are the Four Steps in Identifying the equilibrium price and quantity?

Answer 1

1. Find all equilibrium values for price and quantity (prior to the change)
2. Specify whether the change applies to the list of demands or supply factors
3. Decide whether demand or supply causes a shift to the left or right;
   Graph next to the supply curve on the diagram
4. Identify and compare new equilibrium price and quantity compare to the original.

Question 2

What four standard pieces of information are required to establish the model?

Answer 2

1. Law of Demand
2. Law of Supply
3. Shift variables for demand
4. Shift Variables for supply

Question 3

A _______ in a supply or demand curve will cause a _______ the supply or demand curve

Answer 3

shift; movement along