Final answer:
A shift in supply from S1 to S2 affects the quantity demanded by changing the price: an increase in supply can increase the quantity demanded by lowering the price, while a decrease in supply can lower it by raising the price.
Step-by-step explanation:
When the supply curve shifts from S1 to S2, it implies a movement of the supply curve either to the right (an increase in supply) or to the left (a decrease in supply). If supply increases, represented by a rightward shift, this typically results in a decrease in the price of the good and an increase in the quantity supplied. Conversely, if the supply decreases, indicated by a leftward shift, the price generally increases and the quantity supplied decreases.
As for the quantity demanded, it is the amount of a product that consumers are willing and able to purchase at a certain price. A change in the level of supply, all else being equal, will affect the market price, which in turn can affect the quantity demanded. For example, when supply increases and causes the price to drop, the quantity demanded may increase because the lower price encourages more buyers. Conversely, if supply decreases and the price rises, the quantity demanded may decrease because the higher price can dissuade buyers.
Interpreting the Effect of Supply Shifts on Quantity Demanded
- If supply increases (shifts right), the price decreases, and the quantity demanded typically increases.
- If supply decreases (shifts left), the price increases, and the quantity demanded typically decreases.