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Supply describes the amount sellers are willing to offer; demand describes the amount buyers are willing to purchase at different prices.
A change in the product's price moves along a given curve. Changes in income, preferences, input costs or other conditions can shift a curve. If demand increases while supply is unchanged, the simple model predicts a higher equilibrium price and quantity. If supply increases with demand unchanged, it predicts a lower price and higher quantity. These are conditional mechanisms, not universal forecasts for every market.
Suppose a hypothetical market has demand Q = 100 − 2P and supply Q = 20 + 2P, with consistent quantity and price units. Equating them gives P = 20 and Q = 60. If demand becomes Q = 120 − 2P, the new equilibrium is P = 25 and Q = 70. Both calculations hold supply and the other assumptions fixed.
Shift a curve and see a simplified market find a new equilibrium.
Equilibrium quantity 30
Equilibrium price 50
Higher demand intercept shifts demand outward. Higher supply intercept represents higher costs and shifts supply upward.
At equilibrium: demand price = 80 − 30 = 50; supply price = 20 + 30 = 50.
A simplified competitive market: demand P = D − Q and supply P = S + Q. Units are illustrative. Slopes are held fixed; intercept controls shift curves, while the equilibrium moves along the other curve. Real markets may not adjust immediately or follow straight lines.
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