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Demand Shifts And Supply Shifts DEMAND CURVE SHIFTS TO RIGHT DEMAND CURVE SHIFTS TO LEFT SUPPLY CURVE SHIFTS TO RIGHT SUPPLY CURVE SHIFTS TO LEFT BOTH CURVES SHIFT Anuj Kumar PGT ECONOMICS 1 DEMAND SHIFT {RIGHTWARD} D S D S E1 P1 E P E P Q Q Anuj Kumar PGT ECONOMICS Q1 2 DEMAND SHIFT {RIGHTWARD} • WHEN DEMAND CURVE SHIFTS TO RIGHT {INCREASE} PRICE OF THE COMMODITY AND THE QUANTITY EXCHANGED ALSO INCREASES Anuj Kumar PGT ECONOMICS 3 DEMAND SHIFT • When demand increases there will be competition among buyers. As a result price will increase. • At increased price quantity supplied will also increase leading to increase in equilibrium quantity. Anuj Kumar PGT ECONOMICS 4 Increase in demand D P Anuj Kumar PGT ECONOMICS s 5 DEMAND SHIFT {LEFTWARD} D S D S E E P P P1 E1 Q1 Q Anuj Kumar PGT ECONOMICS Q 6 DEMAND SHIFT {LEFTWARD} • WHEN DEMAND CURVE SHIFTS TO LEFT {DECREASE} PRICE OF THE COMMODITY AND THE QUANTITY EXCHANGED ALSO DECREASES Anuj Kumar PGT ECONOMICS 7 DEMAND SHIFT • When demand decreases there will be competition among sellers. As a result price will fall. • At reduced price quantity supplied will also decrease leading to decrease in equilibrium quantity. Anuj Kumar PGT ECONOMICS 8 Decrease in demand D P Anuj Kumar PGT ECONOMICS s 9 SUPPLY SHIFTS {RIGHTWARD} D E P S D S S1 E P P1 Q Q1 Q Anuj Kumar PGT ECONOMICS 10 SUPPLY SHIFTS {RIGHTWARD} • WHEN SUPPLY CURVE SHIFTS TO RIGHT {INCREASE} PRICE OF THE COMMODITY DECREASES AND THE QUANTITY EXCHANGED INCREASES Anuj Kumar PGT ECONOMICS 11 SUPPLY SHIFT • When Supply increases there will be competition among Sellers. As a result price will fall. • At reduced price quantity demanded will also increase leading to increase in equilibrium quantity. Anuj Kumar PGT ECONOMICS 12 Increase in supply s P D Anuj Kumar PGT ECONOMICS 13 SUPPLY SHIFTS {LEFTWARD} S1 D E P S D S P1 E P Q1 Q Anuj Kumar PGT ECONOMICS Q 14 SUPPLY SHIFTS {LEFTWARD} • WHEN SUPPLY CURVE SHIFTS TO LEFT {DECREASE} PRICE OF THE COMMODITY INCREASES AND THE QUANTITY EXCHANGED DECREASES Anuj Kumar PGT ECONOMICS 15 SUPPLY SHIFTS LEFT • When Supply Decreases there will be competition among buyers. As a result price will rise. • At increased price quantity demanded will fall leading to decrease in equilibrium quantity. Anuj Kumar PGT ECONOMICS 16 Decrease in Supply s P D Anuj Kumar PGT ECONOMICS 17 BOTH SHIFT IN EQUAL PROPORTION D1 D E P S D S S1 E P Q Q1 Q Anuj Kumar PGT ECONOMICS 18 BOTH SHIFT IN EQUAL PROPORTION • WHEN BOTH THE SUPPLY CURVE AND THE DEMAND CURVE INCREASES IN SAME PROPORTION . • NO EFFECT ON THE PRICE BUT QUANTITY EXCHANGED INCREASES Anuj Kumar PGT ECONOMICS 19 SUPPLY SHIFTS MORE THAN DEMAND D1 D S D S E E P S1 E1 P P1 Q Q Anuj Kumar PGT ECONOMICS Q1 20 SUPPLY SHIFTS MORE THAN DEMAND • WHEN THE SUPPLY CURVE INCREASES MORE PROPORTIONATELY THAN DEMAND CURVE. • THE PRICE OF THE COMMODITY DECREASES BUT QUANTITY EXCHANGED INCREASES Anuj Kumar PGT ECONOMICS 21 DEMAND SHIFTS MORE THAN SUPPLY D1 D E P S D S P1 S1 E P Q Q1 Q Anuj Kumar PGT ECONOMICS 22 DEMAND SHIFTS MORE THAN SUPPLY • WHEN THE DEMAND CURVE INCREASES MORE PROPORTIONATELY THAN SUPPLY CURVE. • THE PRICE OF THE COMMODITY INCREASES AND THE QUANTITY EXCHANGED ALSO INCREASES Anuj Kumar PGT ECONOMICS 23