Understanding Shifts in Demand and Supply Diagrams

The video tutorial covers the basics of demand and supply diagrams, focusing on how shifts in these curves affect market equilibrium. It explains the process of analyzing demand and supply situations, using examples from the milk and oil markets to illustrate the concepts. The tutorial emphasizes the importance of understanding initial equilibrium, the causes of shifts, and the resulting new equilibrium. It also highlights the role of price changes in reaching a new equilibrium and the factors that influence these changes.

What is the result when the demand curve shifts outward?

• The equilibrium price decreases and quantity decreases.

• The equilibrium price increases and quantity increases.

• The equilibrium price increases and quantity decreases.

• The equilibrium price decreases and quantity increases.

What happens to the market when there is excess demand?

• Producers decrease their prices.

• The market reaches a new equilibrium immediately.

• Producers increase their prices.

• The quantity supplied exceeds the quantity demanded.

What is the first step in analyzing demand and supply diagrams?

• Identifying the cause of the shift.

• Comparing the new and old equilibrium quantities.

• Determining the new equilibrium price.

• Looking at the initial equilibrium.

In the UK milk market scenario, what is the effect of cows becoming more productive?

• An inward shift in supply.

• An outward shift in demand.

• An inward shift in demand.

• An outward shift in supply.

How does increased car use affect the oil market?

• It causes an outward shift in the supply curve.

• It causes an inward shift in the demand curve.

• It causes an outward shift in the demand curve.

• It causes an inward shift in the supply curve.

What determines the change in equilibrium price when both demand and supply shift?

• The initial equilibrium price.

• The speed of the shifts.

• The initial equilibrium quantity.

• The size of the shifts.

In the oil market scenario, what happens if the supply shift is larger than the demand shift?

• The new equilibrium quantity is unchanged.

• The new equilibrium quantity is lower.

• The new equilibrium price is lower.

• The new equilibrium price is higher.