Supply-Back-Price Up-Quant Down

The growing popularity of DVD players could cause some firms to stop producing VCRs. If so, this would shift back the supply curve for VCRs.

On the graph to the right, the initial equilibrium price is and the equilibrium quantity is . If firms leave the industry, the supply curve shifts back from S1 to S2. This causes the equilibrium price to rise to and the equilibrium quantity to fall to .

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