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05-27-2010, 04:26 PM
  #10
Jarick
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Well there's only two types of supply, the supply curve, and quantity supplied along the supply curve. Quantity supplied can only change with a shift in the demand or supply curve or with some kind of external hard price floor or ceiling. So if we're talking price setting, it's not a shift in the demand curve and it's not a price ceiling.

Maybe there could be a price floor component, and you could possibly get into the idea that quantity supplied is greater than quantity demanded, creating a surplus, and then that inventory needs to be liquidated as the new models are introduced...but I'm not sure I've ever studied that situation.

Anyways, the best example would probable be the supply curve shifting left, which would increase equilibrium price and lower equilibrium demand...but if you can find out if units sold are fairly constant, then you could say the demand curve is more inelastic.

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