of return. There are only four possibilities: the change in any single event may cause the demand curve to shift right

or to shift left, or it may cause the supply curve to shift right or to shift left. The key to analyzing the effect of an

economic event on equilibrium prices and quantities is to determine which of these four possibilities occurred. The

way to do this correctly is to think back to the list of factors that shift the demand and supply curves. Note that if
more than one variable is changing at the same time, the overall impact will depend on the degree of the shifts.

When there are multiple variables, economists isolate each change and analyze it independently.

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4.3 • The Market System as an Efficient Mechanism for Information 103

FIGURE 4.9 Demand and Supply Curves The figure displays a generic demand and supply curve. The horizontal axis
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