Economics Lecture: Demand, Supply, and Equilibrium

Key Concepts

Change in Demand vs. Change in Quantity Demanded

• Change in Demand:

  • Refers to a shift in the demand curve.
  • Caused by shifters such as:
    • Income
    • Population
    • Changes in prices of substitutes and complements
  • Results in the entire demand curve moving either right (increase) or left (decrease).

• Change in Quantity Demanded:

  • Refers to movement along a fixed demand curve.
  • Caused by a change in price.
  • Illustrated by an increase in supply leading to a greater quantity demanded from QE1 to QE2.

Change in Supply vs. Change in Quantity Supplied

• Change in Supply:

  • Refers to a shift in the entire supply curve.
  • Caused by changes in costs such as technology or input prices.
  • Results in the supply curve moving right (increase) or left (decrease).

• Change in Quantity Supplied:

  • Refers to movement along a fixed supply curve.
  • Caused by a change in price.
  • Illustrated by an increase in demand leading to a greater quantity supplied from QE1 to QE2.

Visual Models

• Increase in Demand:

  • Shifts demand curve rightward.
  • Leads to higher prices and quantities exchanged.

• Increase in Supply:

  • Shifts supply curve downward and rightward.
  • Results in lower prices and greater quantities bought and sold.

Summary

• Differentiating between changes in demand/supply and changes in quantity demanded/supplied is crucial.
• Keep track of whether entire curves are shifting or if movements are along fixed curves.

Next Topic

• Elasticity

Additional Resources

• Practice Questions available for self-assessment.
• Follow-ups: Next Video in the series.