Changes in Demand and Supply

CHANGES IN DEMAND AND SUPPLY 3

Changesin Demand and Supply

Changesin Demand and Supply

Shiftingthe demand curve to the right or shifting the supply curve to theleft will have long range economic effect. This is because demandcurve and supply curve represent the market forces of demand andsupply that determine economic status. The economic effects of theshift in the demand curve to the right will be as a result of anincrease in the demand for products in the market (Nelson,2013).This leads to an increase in price, which may lead to demand-pushinflation in the long run. The increase in demand will also triggerproduction in the economy in a bid to clear the excess demand createdby the increase in quantity demanded over the equilibrium supply.This will lead to new entrants to the market, and new investment.Onthe other hand, shifting of the supply curve to the left will lead toan increase in the price of goods in the economy. Shifting supplycurve to the left is as a result of reduction in the quantitysupplied in the market (Opocher&amp Steedman, 2010).Therefore, the quantity supplied will be lower than the equilibriumquantity demanded by the market. This will cause a situation ofexcess demand that pushes the price of the commodity up.Theshifts are more significant than shifts along the demand curve oralong the supply curve. This is because shifts along the demand curveand along the supply curve are caused by changes in the quantitiesdemanded or quantities supplied. The difference is that shifts alongthe curves are cleared by the market and the changes in price aretemporary (D`Orlando&amp Sanfilippo, 2010)..This makes the shifts to the right or left more significant than theshifts along the curves. References

D`Orlando,F., &amp Sanfilippo, E. (2010). &quotBehavioral foundations for theKeynesian Consumption Function&quot. Journalof Economic Psychology31(6): 1035โ€“1046

Nelson,R. (2013). Demand, supply, and their interaction on markets, as seenfrom the perspective of evolutionary economic theory. Journalof Evolutionary Economics,January 2013, Volume 23, Issue 1, pp 17-38

Opocher,A., &amp Steedman, I. (2010). &quotInput Price-Input QuantityRelations and the Numeraire&quot,&nbspCambridgeJournal of Economics,V. 3 (2010): 937โ€“948