Leftward Shift

Definition

A leftward shift refers to a change in the demand or supply curve that results in a decrease in the quantity demanded or supplied at any given price. This shift is represented by the curve moving to the left on a supply and demand graph.

5 Must Know Facts For Your Next Test

1. A leftward shift in the demand curve indicates a decrease in the quantity demanded at any given price.
2. A leftward shift in the supply curve indicates a decrease in the quantity supplied at any given price.
3. A leftward shift in either the demand or supply curve will result in a new equilibrium price that is lower than the original equilibrium price.
4. Factors that can cause a leftward shift in the demand curve include a decrease in consumer income, a change in consumer preferences, or the introduction of a substitute good.
5. Factors that can cause a leftward shift in the supply curve include an increase in the cost of production, a decrease in the number of suppliers, or a change in technology.

Review Questions

• Explain how a leftward shift in the demand curve affects the equilibrium price and quantity in a market.
  • A leftward shift in the demand curve indicates that consumers are willing to purchase less of a good at any given price. This shift will result in a new equilibrium price that is lower than the original equilibrium price, as well as a decrease in the equilibrium quantity. The new equilibrium point will be at the intersection of the unchanged supply curve and the leftward-shifted demand curve.
• Describe the factors that can cause a leftward shift in the supply curve and how this shift affects the market equilibrium.
  • Factors that can cause a leftward shift in the supply curve include an increase in the cost of production, a decrease in the number of suppliers, or a change in technology. When the supply curve shifts leftward, it indicates that suppliers are willing to provide less of a good at any given price. This shift will result in a new equilibrium price that is higher than the original equilibrium price, as well as a decrease in the equilibrium quantity. The new equilibrium point will be at the intersection of the leftward-shifted supply curve and the unchanged demand curve.
• Analyze the combined effects of a leftward shift in both the demand and supply curves on the market equilibrium.
  • If both the demand and supply curves for a good shift leftward, the overall impact on the market equilibrium will depend on the relative magnitudes of the two shifts. In general, a leftward shift in both curves will result in a new equilibrium price and quantity that are lower than the original equilibrium. The new equilibrium point will be at the intersection of the leftward-shifted demand and supply curves. The exact changes in price and quantity will depend on the relative strengths of the demand and supply shifts. If the demand shift is larger, the new equilibrium price and quantity will decrease more significantly. Conversely, if the supply shift is larger, the new equilibrium price and quantity will decrease less.

Related terms

Demand Curve: A graphical representation of the relationship between the price of a good or service and the quantity demanded of that good or service.

Supply Curve: A graphical representation of the relationship between the price of a good or service and the quantity supplied of that good or service.

Equilibrium Price: The price at which the quantity demanded is equal to the quantity supplied, where the market clears.