Question

Determine whether there will be a movement along with the demand /supply curve or a shift in the demand /supply curve. if there is a shift in the curve ,indicate the direction of the shift :-
1. an increase in the price of complement in production.
2.a decrease in the taste of consumers for a product.
3.a decrease in the number of buyers in the market.
4. a lowering of the product price.
5.a worsening of business expectations.
6. a decrease in the government subsidies to firms.

Answer 1

a) This will shift the demand curve to the left and cause a movement along the supply curve, new equilibrium will be at a lower price and lower output.

b) This will shift the demand curve to the left and cause a movement along the supply curve, new equilibrium will be at a lower price and lower output.

c) This will shift the demand curve to the left and cause a movement along the supply curve, new equilibrium will be at a lower price and lower output.

d) This will shift the supply curve to the right and the new equilibrium will be at a lower price  and higher output, this will only cause a movement along the demand curve.

e) This will shift the demand curve to the left and cause a movement along the supply curve, new equilibrium will be at a lower price and lower output.

f) THis will shift the supply curve to the left, cause a movement along the demand curve new equilibrium will be at a higher price and lower output.