Question

"A" represents the new quantity supplied, while "B" represents the new quantity demanded.

What is the result of these changes?



Based on this graph, what should happen to prices?

Answer 1

I can’t see the graph you’re looking at, but from the labels you gave (“A = new quantity supplied” and “B = new quantity demanded”) the usual interpretation is that supply has shifted and demand has shifted. The effect on price depends on the directions of those shifts:

- If supply has increased (supply curve shifts right to give A) and demand has decreased (demand curve shifts left to give B), both changes put downward pressure on price. Result: equilibrium price falls. (Equilibrium quantity could rise or fall depending on which shift is larger.)

- If supply has increased and demand has also increased, quantity definitely rises but the net effect on price is ambiguous (depends on which shift is larger).

- If supply has decreased and demand has increased, both push price up and quantity is ambiguous.

- If supply has decreased and demand has decreased, both push price down? (Careful: supply decrease tends to raise price, demand decrease tends to lower it — net price ambiguous.)

If you want a definite answer for your specific graph, upload the image or describe which direction each curve shifted (right = increase, left = decrease).