Almost every remaining question is this diagram with a twist. The whole chapter reduces to two disciplines: knowing whether a change moves the curve or moves you along it, and working the new equilibrium out in a fixed order rather than guessing.
If you only retain one thing from this chapter, retain this. It is worth more marks than the rest of the material combined, and it is the same shift-versus-movement logic you just met on the PPC.
A change in the good's own price moves you along the curve — a change in quantity demanded or quantity supplied. Anything else shifts the whole curve — a change in demand or supply. There is no third case.
| Wording you'll see | Means | On the diagram |
|---|---|---|
| "quantity demanded falls" | Own price rose | Movement along D |
| "demand falls" | Something other than price changed | The whole D curve shifts left |
| "quantity supplied rises" | Own price rose | Movement along S |
| "supply rises" | Something other than price changed | The whole S curve shifts right |
"The price of coffee rose, so demand for coffee fell, so the price fell again…" — this loop is wrong at the second step. A price rise reduces quantity demanded, which is a movement, not a shift. Only a non-price factor can shift demand. Getting this wrong turns every later question into nonsense, which is exactly why it is tested so hard.
Five shifters each. You need to recall the list, and — harder — get the direction right.
| Shifts DEMAND | Right (more) when… |
|---|---|
| Income | Income rises, for a normal good. For an inferior good it goes the other way — this reversal is a favourite. |
| Price of related goods | A substitute gets dearer, or a complement gets cheaper. |
| Tastes | The good becomes more fashionable or better regarded. |
| Expectations | Buyers expect a higher price later, so they buy now. |
| Number of buyers | The market gains buyers. |
| Shifts SUPPLY | Right (more) when… |
|---|---|
| Input costs | Inputs get cheaper. |
| Technology | Production gets more efficient. |
| Taxes & subsidies | A subsidy arrives, or a tax is lifted. |
| Expectations | Sellers expect a lower price later, so they sell now. Note this is the opposite sign to the buyers' version. |
| Number of sellers | The market gains sellers. |
Work the model below with one slider at a time. Watch which curve moves and which stays pinned — the curve that does not move still changes its quantity, and that is a movement along it.
Equilibrium is the price where quantity demanded equals quantity supplied. Everywhere else the market is pushing itself back, and the direction of that push is examinable.
A shortage is not "not much of it about." Scarcity is permanent and applies to everything; a shortage is a specific, temporary gap between quantity demanded and quantity supplied at a particular price, and it is measured in units. Writing "there is a shortage of oil" without a price attached is the sloppy version that loses marks.
Do not eyeball these. Four steps, same order every time, and the double-shift case has a known answer: one of the two outcomes is simply indeterminate.
If demand and supply both shift, one of price and quantity is determinate and the other is ambiguous — it depends on which shift is larger, which the question usually does not tell you. The correct answer names the ambiguity rather than guessing.
| Both shift | Price | Quantity |
|---|---|---|
| D right, S right | Ambiguous | Rises |
| D left, S left | Ambiguous | Falls |
| D right, S left | Rises | Ambiguous |
| D left, S right | Falls | Ambiguous |
The pattern is worth noticing rather than memorising: when the curves shift the same direction, quantity is certain; when they shift opposite directions, price is certain.
Shuffled. Watch the wording on every stem — "demand" and "quantity demanded" are different claims.
| Model | Genuinely computed | Simplified |
|---|---|---|
| Shift & equilibrium | Both curves after your shifters, the new equilibrium by solving Qd = Qs, and the signed change in price and quantity against the starting point. | Both curves are linear with fixed slopes, so only the intercepts move. Shifters are parallel shifts. |
| Disequilibrium | Quantity demanded and supplied at your price, the gap in units, the short side that caps actual trade, and the direction of price pressure. | No adjustment dynamics — the model shows the gap, not how many weeks it takes to close. |