Supply and Demand Analysis Example
Draw a supply and demand diagram for a firm and market that is initially in long-run equilibrium (where supply, demand, and long-run supply all cross at the same point). Suppose a recession decreases consumer's income. Analyze what happens to:
- the total quantity supplied (Q)
- the quantity supplied by individual firms (q)
- the price (p)
- the profits of firms ($\pi$)
- the number of firms in the market (N)
Your analysis should include both the short-run impact and the long-run impact on all these variables.
Try on your own then watch the following video.
Did you feel like any of the videos above were confusing, or could use more detail? If you're a student at Iowa State University, send me a quick note at mclancy@iastate.edu, referencing the video number and your issue, if applicable.