Supply and Demand Changes; Equilibrium Prices and Equilibrium Quantity

1. COMPLEX CASES
When both demand and supply change, the effect
is a combination of the individual effects.

2. CASE 1- SUPPLY INCREASE; DEMAND
DECREASE
• Supply increase; demand
decrease – a increase in supply
and an decrease in demand will
cause a fall in equilibrium price,
but the effect on equilibrium
quantity cannot determined.

4. • Supply decrease; demand
increase – a decrease in
supply and demand increase
it will cause an increase in
equilibrium price, but the
effect of equilibrium quantity
cannot be determined or it
will be indeterminate,
depending upon the relative
changes in supply and
demand.
CASE 2 – SUPPLY DECREASE; DEMAND
INCREASE

6. CASE 3 – SUPPLY INCREASE; DEMAND
INCREASE
• Supply increase;
demand increase - if
demand and supply
change in the same
direction, the change in
the equilibrium output
can be determined, but
the change in the
equilibrium price cannot.

8. CASE 4 – SUPPLY DECREASE; DEMAND
DECREASE
• Supply decrease;
demand decrease - if
both supply and demand
decrease there will be a
decrease in the
equilibrium output and
the effect on price
cannot be determined.

9. PRICE CONTROL
• Maximum Prices – can reduce the
price of good to make it more
affordable, but the drawback is a
maximum price may lead to lower
supply and shortage.
• Minimum Prices – are use to give
producers a higher income. It used to
increase the income of farmers
producing foods.