Micro Econ Shifts

• Changes to demand and supply will affect equilibrium in the market.
• A demand shift to the right results in an increase in quantity from H to Q2 and an increase in price from P1 to P2.
• A supply shift to the right results in an increase in quantity from S1 to S2 and a reduction in price from P1 to P2.
• Pacific factors that can affect demand include an increase in population, successful advertising campaign, increase in the price of a substitute, increase in income, change in fashion and tastes towards the good, reduction in interest rates, and reduction in the price of a complementary good.
• Supply shifting right can be due to a decrease in costs of production, increase in labor productivity, removal of an input tax, increase in the number of firms, improvement in technology, subsidy granted, good weather, or a combination of factors.
• Demand left or supply left results in a reduction in quantity and price.