Bob’s Bakery in Sligo operates in a very competitive market. Every day the business produces bread, scones and cakes to meet local consumer demand. 1. Draw a demand curve for scones. 2. Draw a supply curve for scones. 3. Indicate on your graph the equilibrium point where consumer demand meets the bakery’s ability to supply scones.
Changes in equilibrium In this section, we will look at four scenarios where there are changes in the equilibrium position of oil.
Scenario 1
A cold winter causes an increase in the demand for oil. Before the change in demand we had an equilibrium position at point ‘A’, where demand and supply intersected. The increase in demand for oil, caused by the cold winter, is shown by a rightward shift in the demand curve. In response to this increase in demand suppliers will charge a higher price and also increase the amount they sell. These adjustments continue until we find a new equilibrium position at point ‘B’. At this point, more oil is sold at a higher price.
