Shifts in Supply and Demand Curves

In addition to the factors that cause fluctuations in the market equilibrium, some developments may lead to sustained changes in the market equilibrium. For example, if a new product becomes available that is a viable substitute for an existing product, there is likely to be either a persistent drop in the quantity consumed of the existing good or a reduction in the market price for the existing good.

The impact of these persistent changes can be viewed in the context of changes in the behavior of buyers or the operations of sellers that cause a shift in the demand curve or the supply curve, respectively. In the case of the new availability of a close substitute for an existing product, we would expect the demand ...

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