rises toward the equilibrium level. Read Demand, Supply, and Efficiency for more discussion on the

importance of the demand and supply model.

3.2 Shifts in Demand and Supply for Goods and Services

LEARNING OBJECTIVES

By the end of this section, you will be able to:

•

Identify factors that affect demand

• Graph demand curves and demand shifts

•

Identify factors that affect supply

• Graph supply curves and supply shifts

The previous module explored how price affects the quantity demanded and the quantity supplied. The result

was the demand curve and the supply curve. Price, however, is not the only factor that influences buyers’ and

sellers’ decisions. For example, how is demand for vegetarian food affected if, say, health concerns cause more

consumers to avoid eating meat? How is the supply of diamonds affected if diamond producers discover

several new diamond mines? What are the major factors, in addition to the price, that influence demand or

supply?

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