Effects of a Change in Demand or Supply on the Equilibrium Position
- Within a market, the position of equilibrium could change due to:
- A change in demand, whereby the demand curve shifts to the right or left
- A change in supply, whereby the supply curve shifts to the right or left
- A more or less simultaneous change in demand and supply
- When looking at these effects, it is important to be mindful of the time scale
- Markets, especially on the supply side, cannot adjust quickly
- On the demand side, however, epidemics can have a rapid effect on the equilibrium price and quantity
- The usual assumption made is that all other market factors remain unchanged.
