Supply and Demand Shifts: What Happens to Price and Quantity
See how shifts in demand and supply change equilibrium price and quantity, and avoid mixing up a shift with a move along the curve.
Demand shifts
- Demand up: price up, quantity up
- Demand down: price down, quantity down
Demand moves price and quantity the same way.
Supply shifts
- Supply up: price down, quantity up
- Supply down: price up, quantity down
Supply moves price and quantity in opposite ways.
Example 1
A new trend makes sneakers more popular. What happens?
- More people want sneakers at every price
- Demand shifts right
Price up, quantity up
Example 2
A better machine makes shoes cheaper to produce. What happens?
- Producers can sell more at every price
- Supply shifts right
Price down, quantity up
Common mistake
A price change shifts the demand curve
A price change moves along the curve. It does not shift it.
Shifts come from income, tastes, costs, technology and expectations.
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