Question

The following graph shows the market for cars in 2010 . Between 2010 and 2011, the equilibrium price of cars remained constant, but the equilibrium quantity of cars decreased. From this, you can conclude that between 2010 and 2011, the supply of cars _______  and the demand for cars _______ .

Adjust the graph to illustrate your answer by showing the positions of the supply and demand curves in 2011.

Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther.

Answer 1

The quantity is constant (the same) and the price went up. So with the new graph, The Supply (orange) decreased (shift left) while the Demand (blue) increased (shift right).  

Answer 2

The supply of cars decreased and the demand for cars decreased.

S P |------ IX Q2 Q1

The two dotted lines D₂ and S₂ indicate the new demand and supply curves respectively after both the demand and supply have decreased thus, causing the quantity to reduce to Q₂ while the price remains the same.