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Starting: supply curve $y=x+10$ and demand curve $y = -x+30$ with equilibrium at (10, 20).

The problem states that DEMAND shifts leftwards by 3 units and to find the new equilibrium. My professor did not specifically state the two equations, but a 1 to 1 relationship is implied, so I was able to find them.

(Meaning that for example, the original supply curve would be a line consisting of points $(10,20), (11,21), (9,19)$, etc. and the demand curve would have points $(10,20), (11,19), (9,21)$, etc. So slope of $1$ and $-1$)

With equilibrium at $(10, 20)$. My professor goes on to complete the problem by moving 3 units leftward from 10 on the x-axis and 3 units down from 20 on the y-axis. His new equilibrium is $(7, 17)$.

I didn't think that it was an accurate way to represent/find the new equilibrium. Supply/demand graphs are supposed to shift at every point. I then plugged it into a graph and found that it was incorrect.

DEMAND shifts leftwards by 3 to create a new DEMAND curve $y=-x+27$ with equilibrium at $(8.5, 18.5)$ which is not $(7, 17)$.

Was the professor wrong?

mathguy
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    Two problems here. 1) When you attempted to find the new equilibrium, you moved the demand curve, not the supply curve. 2) Both equilibrium points (yours and your professor's) obey the equation of the original supply curve, which suggests that neither of you found the right answer if the supply curve really has shifted.

    As far as I can tell, the new equilibrium should be at $(8.5,21.5)$.

     – Robert Howard Feb 21 '19 at 04:01
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    @RobertHoward stupid mistake on my end. I rewrote the question as I had meant to say demand not supply – mathguy Feb 21 '19 at 04:04
  • That makes much more sense! If the demand curve is the one that moves $3$ units to the left, then your answer is correct. – Robert Howard Feb 21 '19 at 04:07

1 Answers1

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According to the requirement, yes, the professor was wrong. Due to the gradient of the graph, shifting the graph by $n$ units resulting in the equilibrium shifted by $n/2$ units. You professor might think as the other way, as shifting the graph by $n$ units resulting in the equilibrium shifted by $n$ units.

qsmy
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