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Shifts of the Demand Curve

The Effects of Changes in Supply and Demand on Equilibrium Price and Quantity: Shifts of the Demand Curve

All things being equal, a shift in the demand curve to the right or left with supply remaining unchanged will affect both the equilibrium price and quantity and this is what is referred to as the partial equilibrium analysis.

Rightward Shift of the Demand Curve:

A shift of the demand curve (DD) to the right (D1D1) when supply conditions remain unchanged (SS) will lead to an increase in the equilibrium price and quantity as illustrated in the figure below.

Figure: Rightward Shift of the Demand Curve

Leftward Shift of the Demand Curve:

A leftward shift of the demand curve (DD) to the left (D2D2) when supply conditions remain unchanged (SS) will lead to a fall in price and the equilibrium quantity as illustrated in the figure below.

Figure: Leftward Shift of the Demand Curve

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