Managerial Economicsintermediate
Arrange the steps in a comparative-statics analysis after a market change.
Answer
Identify which curve shifts, Determine the direction of the shift, Hold the other curve unchanged if the scenario says it is unchanged, Compare the new equilibrium with the original one
Explanation
### The order
1. **Identify which curve shifts**: first determine whether demand or supply changed.
2. **Determine the direction of the shift**: a rise or fall in a determinant establishes whether the curve moves right or left.
3. **Hold the other curve unchanged if the scenario says it is unchanged**: this isolates the stated change.
4. **Compare the new equilibrium with the original one**: use the shift to identify the change in equilibrium price and quantity.
### The concept
Comparative statics compares two equilibrium positions. It is not a description of every adjustment along the way; it focuses on the initial and final outcomes.
### Remember
Trace the curve shift first, then infer the new equilibrium.
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