Draw the graph · Micro · Supply and demand
A rival app launches
Drag a curve sideways, or use its arrows. A curve you do not move is a curve you are saying stays put. Make each shift clear enough that a reader could see it.
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Demand shifts left. Supply stays put.
The new app is a substitute. When a cheaper substitute appears, buyers want fewer subscriptions to the original at every price, so demand shifts left. The original app's costs are unchanged, so supply stays put. The lower price moves the firm down along its supply curve.
Price falls and quantity falls.
Common mistake. Some students shift supply, thinking about the market having 'more apps.' The rival is a separate market. Its arrival reaches this market through buyers, as a fall in demand.
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Lesson: Shifts in Demand