When demand increases why does the price decrease but equilibrium price increase?

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On a demand curve when the demand increases the price will decrease. However on a demand and supply graph, when the demand shifts to the right, the price will increase. I understand why, but then what is the point of analyzing a demand curve, if it contradicts the market equilibrium graph?



I am sorry if this is a stupid question. It has only been a month since I have started economics in high school.










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    On a demand curve when the demand increases the price will decrease. However on a demand and supply graph, when the demand shifts to the right, the price will increase. I understand why, but then what is the point of analyzing a demand curve, if it contradicts the market equilibrium graph?



    I am sorry if this is a stupid question. It has only been a month since I have started economics in high school.










    share|improve this question







    New contributor




    Rileyna is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
    Check out our Code of Conduct.





















      up vote
      3
      down vote

      favorite









      up vote
      3
      down vote

      favorite











      On a demand curve when the demand increases the price will decrease. However on a demand and supply graph, when the demand shifts to the right, the price will increase. I understand why, but then what is the point of analyzing a demand curve, if it contradicts the market equilibrium graph?



      I am sorry if this is a stupid question. It has only been a month since I have started economics in high school.










      share|improve this question







      New contributor




      Rileyna is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
      Check out our Code of Conduct.











      On a demand curve when the demand increases the price will decrease. However on a demand and supply graph, when the demand shifts to the right, the price will increase. I understand why, but then what is the point of analyzing a demand curve, if it contradicts the market equilibrium graph?



      I am sorry if this is a stupid question. It has only been a month since I have started economics in high school.







      microeconomics






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      Rileyna is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
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          On a demand curve when the demand increases the price will decrease.




          You actually mean "along the demand curve, a decrease in price will increase quantity demanded, all else equal". This is the law of demand, and it holds for ordinary ("non-Giffen/Veblen") goods that have downward-sloping demand curves. There is no shift of the demand schedule in this scenario:



          enter image description here




          However on a demand and supply graph, when the demand shifts to the right, the price will increase.




          Yes, when the demand curve shifts to the right (all else equal), the equilibrium market price rises to account for the fact that consumers are now willing to pay more. The increase in price is the mechanism by which excess demand at the initial price is cleared:



          enter image description here




          There is no contradiction here in the supply-and-demand model. Note that movements along the demand curve can only occur when we are away from a market equilibrium. These price movements are traced out by shifts of the supply curve and they continue until the new market equilibrium is reached.



          Based on your vocabulary, you are likely misunderstanding the demand curve with actual quantity demanded.






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            0
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            To answer your question, think of the actual function



            The demand function is dependent on quantity, and the result of which will be the price. The utility function and budget constraints are the same



            On the other hand, if there is another impact on demand, which is not the quantity, let's say a health trend, then the entire demand function will change and meet the supply for health food at a higher place
            The utility function will change and budget constraints will be the same






            share|improve this answer




















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              2 Answers
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              active

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              2 Answers
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              active

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              up vote
              2
              down vote














              On a demand curve when the demand increases the price will decrease.




              You actually mean "along the demand curve, a decrease in price will increase quantity demanded, all else equal". This is the law of demand, and it holds for ordinary ("non-Giffen/Veblen") goods that have downward-sloping demand curves. There is no shift of the demand schedule in this scenario:



              enter image description here




              However on a demand and supply graph, when the demand shifts to the right, the price will increase.




              Yes, when the demand curve shifts to the right (all else equal), the equilibrium market price rises to account for the fact that consumers are now willing to pay more. The increase in price is the mechanism by which excess demand at the initial price is cleared:



              enter image description here




              There is no contradiction here in the supply-and-demand model. Note that movements along the demand curve can only occur when we are away from a market equilibrium. These price movements are traced out by shifts of the supply curve and they continue until the new market equilibrium is reached.



              Based on your vocabulary, you are likely misunderstanding the demand curve with actual quantity demanded.






              share|improve this answer


























                up vote
                2
                down vote














                On a demand curve when the demand increases the price will decrease.




                You actually mean "along the demand curve, a decrease in price will increase quantity demanded, all else equal". This is the law of demand, and it holds for ordinary ("non-Giffen/Veblen") goods that have downward-sloping demand curves. There is no shift of the demand schedule in this scenario:



                enter image description here




                However on a demand and supply graph, when the demand shifts to the right, the price will increase.




                Yes, when the demand curve shifts to the right (all else equal), the equilibrium market price rises to account for the fact that consumers are now willing to pay more. The increase in price is the mechanism by which excess demand at the initial price is cleared:



                enter image description here




                There is no contradiction here in the supply-and-demand model. Note that movements along the demand curve can only occur when we are away from a market equilibrium. These price movements are traced out by shifts of the supply curve and they continue until the new market equilibrium is reached.



                Based on your vocabulary, you are likely misunderstanding the demand curve with actual quantity demanded.






                share|improve this answer
























                  up vote
                  2
                  down vote










                  up vote
                  2
                  down vote










                  On a demand curve when the demand increases the price will decrease.




                  You actually mean "along the demand curve, a decrease in price will increase quantity demanded, all else equal". This is the law of demand, and it holds for ordinary ("non-Giffen/Veblen") goods that have downward-sloping demand curves. There is no shift of the demand schedule in this scenario:



                  enter image description here




                  However on a demand and supply graph, when the demand shifts to the right, the price will increase.




                  Yes, when the demand curve shifts to the right (all else equal), the equilibrium market price rises to account for the fact that consumers are now willing to pay more. The increase in price is the mechanism by which excess demand at the initial price is cleared:



                  enter image description here




                  There is no contradiction here in the supply-and-demand model. Note that movements along the demand curve can only occur when we are away from a market equilibrium. These price movements are traced out by shifts of the supply curve and they continue until the new market equilibrium is reached.



                  Based on your vocabulary, you are likely misunderstanding the demand curve with actual quantity demanded.






                  share|improve this answer















                  On a demand curve when the demand increases the price will decrease.




                  You actually mean "along the demand curve, a decrease in price will increase quantity demanded, all else equal". This is the law of demand, and it holds for ordinary ("non-Giffen/Veblen") goods that have downward-sloping demand curves. There is no shift of the demand schedule in this scenario:



                  enter image description here




                  However on a demand and supply graph, when the demand shifts to the right, the price will increase.




                  Yes, when the demand curve shifts to the right (all else equal), the equilibrium market price rises to account for the fact that consumers are now willing to pay more. The increase in price is the mechanism by which excess demand at the initial price is cleared:



                  enter image description here




                  There is no contradiction here in the supply-and-demand model. Note that movements along the demand curve can only occur when we are away from a market equilibrium. These price movements are traced out by shifts of the supply curve and they continue until the new market equilibrium is reached.



                  Based on your vocabulary, you are likely misunderstanding the demand curve with actual quantity demanded.







                  share|improve this answer














                  share|improve this answer



                  share|improve this answer








                  edited 1 hour ago

























                  answered 2 hours ago









                  Kenneth Rios

                  562111




                  562111




















                      up vote
                      0
                      down vote













                      To answer your question, think of the actual function



                      The demand function is dependent on quantity, and the result of which will be the price. The utility function and budget constraints are the same



                      On the other hand, if there is another impact on demand, which is not the quantity, let's say a health trend, then the entire demand function will change and meet the supply for health food at a higher place
                      The utility function will change and budget constraints will be the same






                      share|improve this answer
























                        up vote
                        0
                        down vote













                        To answer your question, think of the actual function



                        The demand function is dependent on quantity, and the result of which will be the price. The utility function and budget constraints are the same



                        On the other hand, if there is another impact on demand, which is not the quantity, let's say a health trend, then the entire demand function will change and meet the supply for health food at a higher place
                        The utility function will change and budget constraints will be the same






                        share|improve this answer






















                          up vote
                          0
                          down vote










                          up vote
                          0
                          down vote









                          To answer your question, think of the actual function



                          The demand function is dependent on quantity, and the result of which will be the price. The utility function and budget constraints are the same



                          On the other hand, if there is another impact on demand, which is not the quantity, let's say a health trend, then the entire demand function will change and meet the supply for health food at a higher place
                          The utility function will change and budget constraints will be the same






                          share|improve this answer












                          To answer your question, think of the actual function



                          The demand function is dependent on quantity, and the result of which will be the price. The utility function and budget constraints are the same



                          On the other hand, if there is another impact on demand, which is not the quantity, let's say a health trend, then the entire demand function will change and meet the supply for health food at a higher place
                          The utility function will change and budget constraints will be the same







                          share|improve this answer












                          share|improve this answer



                          share|improve this answer










                          answered 3 hours ago









                          Guy Louzon

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                          384110




















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