The table below provides a comparison between the impact of an increase in demand and a decrease in demand on the equilibrium quantity and equilibrium price.
The impact of an increase in the demand for a good or service can be summarised as follows:
An increase in the demand causes the demand curve to shift to the right.
At the initial equilibrium price, excess demand (or shortage) develops in the market. In other words, the quantity demanded exceeds the quantity supplied.
The impact of an increase in the demand for a good or service can be summarised as follows:
An increase in the demand causes the demand curve to shift to the right.
At the initial equilibrium price, excess demand (or shortage) develops in the market. In other words, the quantity demanded exceeds the quantity supplied.