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Price and Quantity

Price and Quantity. Decrease Supply. Shortage of steel What happens to supply of cars? Cars decrease since steel is more scarce Company will produce fewer cars Quantity moves, Equilibrium moves (higher price, lower quantity) Whenever supply/demand curves move- new equilibrium is created.

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Price and Quantity

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  1. Price and Quantity

  2. Decrease Supply • Shortage of steel • What happens to supply of cars? • Cars decrease since steel is more scarce • Company will produce fewer cars • Quantity moves, Equilibrium moves (higher price, lower quantity) • Whenever supply/demand curves move- new equilibrium is created

  3. Increase Supply • Govt subsidizes the carmaker • What happens to the cost of production for the company? • Cost will decrease

  4. Increase Demand • What will happen to album sales if a band becomes more popular? • Quantity of albums sold will increase • Price will increase • Determinant of consumer taste/preference will cause movement in demand curve

  5. Decrease Demand • What happens if a product suddenly falls out of favor with the public? • Demand for the product goes down • Price will have to drop, but still difficult to sell

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