ECO 1001 Chapter Notes - Chapter 3: Independent Goods, Demand Curve, Complementary Good

• School: St. John's University
• Department: ECO - ECONOMICS
• Course: ECO 1001
• Professor: Kevin Kane

Document Summary

Lower resource prices reduce protection costs and increase profits. The cause of a change in supply shifts is a change in one or more of the determinants of supply: a change in quantity supplied is a movement from one point to another on a fixed supply curve. The cause of this is a change in the price of the specific product being considered: the equilibrium price is the price where the intentions of buyers and sellers match. A decrease in demand reduces both equilibrium price and equilibrium quantity: an increase in supply reduces equilibrium prices but increases equilibrium quantity. If supply decreases equilibrium prices rises while equilibrium quantity declines. If the increase in supply is larger than the decrease in demand, the equilibrium quantity will increase but if the decrease in demand is greater than the increase in supply, the equilibrium quantity will decrease.