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Part Two Answer

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Bethel College
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Running head: DEMAND, SUPPLY, AND MARKET EQUILIBRIUM
Demand, Supply, and Market Equilibrium
Student’s Name
Institutional Affiliation

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DEMAND, SUPPLY, AND MARKET EQUILIBRIUM 1
A Detailed Focus on the Demand, Supply, and Market Equilibrium
1. Difference Between A Movement Along a Supply Curve and a Shift in the Supply
Curve
A movement along a supply curve occurs when a change in price stimulates a change in the
quantity supplied. Therefore, a movement along the supply curve outlines a scenario where a
change from one price to another stimulates a change in quantity supply along the demand curve,
as described in figure 1 below. In contrast, a shift in the supply curve occurs when there is a change
in non-price determinants. Therefore, the price may remain the same, but there are other changes
that stimulate the shift of the entire demand curve. A shift in the supply curve depends on non-
price determinants such as technology, and thus, if the price remains constant, the whole curve
may shift either increasing or decreasing the curve as outlined in figure 2 below.
0
1
2
3
4
5
6
7
8
Q1 Q1 Q2 Q3
Movement along the Supply Curve
Price
Figure 1

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Running head: DEMAND, SUPPLY, AND MARKET EQUILIBRIUM Demand, Supply, and Market Equilibrium Student’s Name Institutional Affiliation DEMAND, SUPPLY, AND MARKET EQUILIBRIUM 1 A Detailed Focus on the Demand, Supply, and Market Equilibrium 1. Difference Between A Movement Along a Supply Curve and a Shift in the Supply Curve A movement along a supply curve occurs when a change in price stimulates a change in the quantity supplied. Therefore, a movement along the supply curve outlines a scenario where a change from one price to another stimulates a change in quantity supply along the demand curve, as described in figure 1 below. In contrast, a shift in the supply curve occurs when there is a change in non-price determinants. Therefore, the price may remain the same, but there are other changes that stimulate the shift of the entire demand curve. A shift in the supply curve depends on nonprice determinants such as technology, and thus, if the price remains constant, the whole curve may shift either increasing or decreasing the curve as outlined in figure 2 below. Movement along the Supply Curve Price 8 7 6 5 4 3 2 1 0 Q1 Figure 1 Q1 Q2 Q3 DEMAND, SUPPLY, AND MARKET EQUILIBRIUM 2 A Shift in the Supply Curve Decrease in Supply Quantity Supplied Increase in Supply 12 10 8 6 4 2 0 Q1 Q2 Q3 Q4 Figure 2 2. Purpose and Location of a New Firm The world is continually evolving and thus necessitates understanding the business market before starting a business. Notably ...
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