Identify the determinants of supply and demand; demonstrate the impact of shifts in both market supply and demand curves on equilibrium price and output.

Determinants of demand are price of product, price of other products, population, income, etc.

Determinants of supply are price of the product, number of producers, cost of resources, technology etc.

A rightward shift in the demand curve causes price and output level to increase. While a leftward shift contributes to a decline in the price and output level.

A rightward shift in the supply curve causes price to fall and output level to increase. A leftward shift on the other hand causes price to increase and output level to fall.

Explanation:

Other things being constant, the demand and supply both are determined by the price of the commodity. The demand for a product is inversely related to its price. While on the contrary, the supply of a product is directly related to price.

Other than price, demand is affected by a change in income, population, price of other goods, consumers tastes and preferences. Supply is affected by the cost of production including the cost of fixed and variable inputs such as wages, price of raw materials, etc. Other determinants of supply are taxes and subsidies, technology, number of producers, etc.

A rightward shift in the demand curve causes price and output level to increase. While a leftward shift contributes to a decline in the price and output level.

A rightward shift in the supply curve causes the price to fall and output level to increase. A leftward shift, on the other hand, causes the price to increase and output level to fall.

Price, product, price of other product, population, income, etc.