A n early model that you encounter during any introductory economics course is the demand and supply model. This is a powerful device that enables us to analyse a wide range of market situations. Learning to use it appropriately is thus an important step towards becoming an economist.
The model is relatively straightforward, but there are some pitfalls that you should be aware of when using it. In this brief article, I want to warn you about one of these pitfalls, which does not only apply to the demand and supply model: it is lurking in wait for you elsewhere as well. This involves the important distinction between ‘movements along’ and ‘shifts of’ the demand or supply curve. You will find that the same distinction is important in many other contexts.
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