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When demand increases why does the price decrease but equilibrium price increase?
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On a demand curve when the demand increases the price will decrease. However on a demand and supply graph, when the demand shifts to the right, the price will increase. I understand why, but then what is the point of analyzing a demand curve, if it contradicts the market equilibrium graph?
I am sorry if this is a stupid question. It has only been a month since I have started economics in high school.
microeconomics
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Rileyna
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up vote
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down vote
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On a demand curve when the demand increases the price will decrease. However on a demand and supply graph, when the demand shifts to the right, the price will increase. I understand why, but then what is the point of analyzing a demand curve, if it contradicts the market equilibrium graph?
I am sorry if this is a stupid question. It has only been a month since I have started economics in high school.
microeconomics
asked 4 hours ago
Rileyna
161
New contributor
Rileyna is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
add a comment |Â
up vote
3
down vote
favorite
up vote
3
down vote
favorite
On a demand curve when the demand increases the price will decrease. However on a demand and supply graph, when the demand shifts to the right, the price will increase. I understand why, but then what is the point of analyzing a demand curve, if it contradicts the market equilibrium graph?
I am sorry if this is a stupid question. It has only been a month since I have started economics in high school.
microeconomics
asked 4 hours ago
Rileyna
161
New contributor
Rileyna is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
On a demand curve when the demand increases the price will decrease. However on a demand and supply graph, when the demand shifts to the right, the price will increase. I understand why, but then what is the point of analyzing a demand curve, if it contradicts the market equilibrium graph?
I am sorry if this is a stupid question. It has only been a month since I have started economics in high school.
microeconomics
microeconomics
asked 4 hours ago
Rileyna
161
New contributor
Rileyna is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
asked 4 hours ago
Rileyna
161
New contributor
Rileyna is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
asked 4 hours ago
Rileyna
161
New contributor
Rileyna is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
asked 4 hours ago
Rileyna
161
asked 4 hours ago
Rileyna
161
161
New contributor
Rileyna is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
New contributor
Rileyna is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
Rileyna is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
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2 Answers
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On a demand curve when the demand increases the price will decrease.
You actually mean "along the demand curve, a decrease in price will increase quantity demanded, all else equal". This is the law of demand, and it holds for ordinary ("non-Giffen/Veblen") goods that have downward-sloping demand curves. There is no shift of the demand schedule in this scenario:
However on a demand and supply graph, when the demand shifts to the right, the price will increase.
Yes, when the demand curve shifts to the right (all else equal), the equilibrium market price rises to account for the fact that consumers are now willing to pay more. The increase in price is the mechanism by which excess demand at the initial price is cleared:
There is no contradiction here in the supply-and-demand model. Note that movements along the demand curve can only occur when we are away from a market equilibrium. These price movements are traced out by shifts of the supply curve and they continue until the new market equilibrium is reached.
Based on your vocabulary, you are likely misunderstanding the demand curve with actual quantity demanded.
answered 2 hours ago
Kenneth Rios
562111
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up vote
0
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To answer your question, think of the actual function
The demand function is dependent on quantity, and the result of which will be the price. The utility function and budget constraints are the same
On the other hand, if there is another impact on demand, which is not the quantity, let's say a health trend, then the entire demand function will change and meet the supply for health food at a higher place
The utility function will change and budget constraints will be the same
answered 3 hours ago
Guy Louzon
384110
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2 Answers
2
active
oldest
votes
2 Answers
2
active
oldest
votes
active
oldest
votes
active
oldest
votes
up vote
2
down vote
On a demand curve when the demand increases the price will decrease.
You actually mean "along the demand curve, a decrease in price will increase quantity demanded, all else equal". This is the law of demand, and it holds for ordinary ("non-Giffen/Veblen") goods that have downward-sloping demand curves. There is no shift of the demand schedule in this scenario:
However on a demand and supply graph, when the demand shifts to the right, the price will increase.
Yes, when the demand curve shifts to the right (all else equal), the equilibrium market price rises to account for the fact that consumers are now willing to pay more. The increase in price is the mechanism by which excess demand at the initial price is cleared:
There is no contradiction here in the supply-and-demand model. Note that movements along the demand curve can only occur when we are away from a market equilibrium. These price movements are traced out by shifts of the supply curve and they continue until the new market equilibrium is reached.
Based on your vocabulary, you are likely misunderstanding the demand curve with actual quantity demanded.
answered 2 hours ago
Kenneth Rios
562111
add a comment |Â
up vote
2
down vote
On a demand curve when the demand increases the price will decrease.
You actually mean "along the demand curve, a decrease in price will increase quantity demanded, all else equal". This is the law of demand, and it holds for ordinary ("non-Giffen/Veblen") goods that have downward-sloping demand curves. There is no shift of the demand schedule in this scenario:
However on a demand and supply graph, when the demand shifts to the right, the price will increase.
Yes, when the demand curve shifts to the right (all else equal), the equilibrium market price rises to account for the fact that consumers are now willing to pay more. The increase in price is the mechanism by which excess demand at the initial price is cleared:
There is no contradiction here in the supply-and-demand model. Note that movements along the demand curve can only occur when we are away from a market equilibrium. These price movements are traced out by shifts of the supply curve and they continue until the new market equilibrium is reached.
Based on your vocabulary, you are likely misunderstanding the demand curve with actual quantity demanded.
answered 2 hours ago
Kenneth Rios
562111
add a comment |Â
up vote
2
down vote
up vote
2
down vote
On a demand curve when the demand increases the price will decrease.
You actually mean "along the demand curve, a decrease in price will increase quantity demanded, all else equal". This is the law of demand, and it holds for ordinary ("non-Giffen/Veblen") goods that have downward-sloping demand curves. There is no shift of the demand schedule in this scenario:
However on a demand and supply graph, when the demand shifts to the right, the price will increase.
Yes, when the demand curve shifts to the right (all else equal), the equilibrium market price rises to account for the fact that consumers are now willing to pay more. The increase in price is the mechanism by which excess demand at the initial price is cleared:
There is no contradiction here in the supply-and-demand model. Note that movements along the demand curve can only occur when we are away from a market equilibrium. These price movements are traced out by shifts of the supply curve and they continue until the new market equilibrium is reached.
Based on your vocabulary, you are likely misunderstanding the demand curve with actual quantity demanded.
answered 2 hours ago
Kenneth Rios
562111
On a demand curve when the demand increases the price will decrease.
You actually mean "along the demand curve, a decrease in price will increase quantity demanded, all else equal". This is the law of demand, and it holds for ordinary ("non-Giffen/Veblen") goods that have downward-sloping demand curves. There is no shift of the demand schedule in this scenario:
However on a demand and supply graph, when the demand shifts to the right, the price will increase.
Yes, when the demand curve shifts to the right (all else equal), the equilibrium market price rises to account for the fact that consumers are now willing to pay more. The increase in price is the mechanism by which excess demand at the initial price is cleared:
There is no contradiction here in the supply-and-demand model. Note that movements along the demand curve can only occur when we are away from a market equilibrium. These price movements are traced out by shifts of the supply curve and they continue until the new market equilibrium is reached.
Based on your vocabulary, you are likely misunderstanding the demand curve with actual quantity demanded.
answered 2 hours ago
Kenneth Rios
562111
edited 1 hour ago
answered 2 hours ago
Kenneth Rios
562111
answered 2 hours ago
Kenneth Rios
562111
answered 2 hours ago
Kenneth Rios
562111
562111
add a comment |Â
add a comment |Â
up vote
0
down vote
To answer your question, think of the actual function
The demand function is dependent on quantity, and the result of which will be the price. The utility function and budget constraints are the same
On the other hand, if there is another impact on demand, which is not the quantity, let's say a health trend, then the entire demand function will change and meet the supply for health food at a higher place
The utility function will change and budget constraints will be the same
answered 3 hours ago
Guy Louzon
384110
add a comment |Â
up vote
0
down vote
To answer your question, think of the actual function
The demand function is dependent on quantity, and the result of which will be the price. The utility function and budget constraints are the same
On the other hand, if there is another impact on demand, which is not the quantity, let's say a health trend, then the entire demand function will change and meet the supply for health food at a higher place
The utility function will change and budget constraints will be the same
answered 3 hours ago
Guy Louzon
384110
add a comment |Â
up vote
0
down vote
up vote
0
down vote
To answer your question, think of the actual function
The demand function is dependent on quantity, and the result of which will be the price. The utility function and budget constraints are the same
On the other hand, if there is another impact on demand, which is not the quantity, let's say a health trend, then the entire demand function will change and meet the supply for health food at a higher place
The utility function will change and budget constraints will be the same
answered 3 hours ago
Guy Louzon
384110
To answer your question, think of the actual function
The demand function is dependent on quantity, and the result of which will be the price. The utility function and budget constraints are the same
On the other hand, if there is another impact on demand, which is not the quantity, let's say a health trend, then the entire demand function will change and meet the supply for health food at a higher place
The utility function will change and budget constraints will be the same
answered 3 hours ago
Guy Louzon
384110
answered 3 hours ago
Guy Louzon
384110
answered 3 hours ago
Guy Louzon
384110
answered 3 hours ago
Guy Louzon
384110
384110
add a comment |Â
add a comment |Â
Rileyna is a new contributor. Be nice, and check out our Code of Conduct.
Rileyna is a new contributor. Be nice, and check out our Code of Conduct.
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