Supply and Demand: Changes in Equilibrium

Change in Market Equilibrium: Change in Demand

Price of caviar (per pound)

Quantity of caviar(millions of pounds)

70

$30

$15

4020 90

$25

$20

$5

$10

$35

80605030 10

$40

$45

95

S --What if the price of escargot (another snooty appetizer) skyrocketed?

D2D1

E1P1

P2

E2

Q1 Q2

Demand for caviarincreases…

…which leads to movement along the supply curve to:1) higher equilibrium

price and 2) higher equilibrium

quantity.

Change in Market Equilibrium: Change in Supply

Price of caviar (per pound)

Quantity of caviar(millions of pounds)

70

$30

$15

4020 90

$25

$20

$5

$10

$35

80605030 10

$40

$45

95

S2S1

E1P1

P2

E2

Q1Q2

Supply of caviardecreases…

…which leads to movement along the demand curve to:1) higher equilibrium

price and 2) lower equilibrium

quantity.

--What if sturgeon (the fish whose eggs make escargot) populations declined?

D