00:01
So let me try to walk you through this entire series of things.
00:03
We have a whole bunch of things going on.
00:04
And of course, we need to illustrate them.
00:06
A market is a price and quantity, we have an original supply curve, s1 going through the origin, we have an original demand curve, d1.
00:16
And that means we have some original equilibrium, which is q1 and p1, right? now demand is going to increase.
00:24
So again, this is exactly what is shown on the diagram, demand increases to d2.
00:30
And we have at the original price, right, we have an excess demand, right? at the original price, there's this gap between the amount demanded and the amount supplied.
00:40
So the first thing that could happen is the we just adjust the price, right? so if the price just adjusts, we end up here.
00:49
And this is indeed, again, correctly labeled on the diagram p2, q2.
00:55
And this is if price adjusts.
00:59
But then we have another option that supply increases, right? so if supply increases, we're not told where the price is coming from, right? so notice that we don't have to shift the supply curve so that the price goes back to p1.
01:20
So i'm just going to draw the supply curve shifting out.
01:24
Here's my increase in supply.
01:27
And that yields another equilibrium at q3 and p3...