pg-9

Again, we consider the following demand and supply relationships:
        Demand: QD = 40 - P
        Supply: QS = -60 + 3P

We already found that the equilibrium price and quantity for this market are:
        P = 25 and
        Q = 15

Now, suppose supply shifts back so that the new supply relationship is:
        QS2 = -80 - 3P

We can solve for the new equilibrium:
        40 - P = -80 + 3P
        120 = 4P
        P = 30
        Q = 10

When supply shifts out, equilibrium price rises and quantity falls, just as we found graphically.

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