What change occurs in the market when demand or supply curves shift?

When the demand or supply curves shift, they directly impact the equilibrium price and quantity in the market. The equilibrium is the point where the quantity demanded by consumers equals the quantity supplied by producers.

When there is an increase in demand, the demand curve shifts to the right, leading to a higher equilibrium price and a greater quantity sold. Conversely, if there is a decrease in demand, the demand curve shifts to the left, resulting in a lower equilibrium price and reduced quantity sold.

Similarly, when supply increases, the supply curve shifts to the right, which typically lowers the equilibrium price while raising the equilibrium quantity. A decrease in supply shifts the curve to the left, causing an increase in the equilibrium price and a decrease in the quantity sold.

Through these shifts in demand and supply, the market seeks a new balance in price and quantity, demonstrating the dynamic nature of economic interactions. Understanding this relationship is crucial for analyzing market behavior and predicting the outcomes of various economic changes.