Shifts and the New Equilibrium

A shift means the whole curve moves, caused by something other than price: income, tastes, input costs, the number of sellers, weather, expectations. Once that curve moves, the old price no longer clears the market, so price and quantity adjust until supply and demand cross at a new point. If demand shifts right, buyers want more at every price, so the equilibrium climbs up the fixed supply curve: both price and quantity rise. If supply shifts left, sellers offer less at every price, so the equilibrium climbs up the fixed demand curve: price rises but quantity falls.

The key habit is separating what moved the curve from what moved the equilibrium. A demand shift changes price, and that price change makes sellers produce more or less — but that's movement along the existing supply curve, not a second shift. The supply curve only shifts if something changes sellers' costs or conditions directly, like a new technology or a tax on producers.

This sets up everything that follows in the unit: taxes, subsidies, and price controls all work by shifting a curve or by blocking the market from reaching its new equilibrium, and you'll judge their effects on price, quantity, and surplus by comparing the old equilibrium to the new one.