Draw the graph · Micro · Supply and demand
Recession and new cars
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.
Income is a demand-side factor. With less to spend, households want fewer new cars at every price, so demand shifts left. Carmakers' costs have not changed, so supply stays put. The lower price moves carmakers down along their supply curve.
Price falls and quantity falls.
Common mistake. Some students shift supply left because 'factories cut production.' Production falls because buyers want fewer cars at the going price, which is the demand shift working through the market.
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