"An increase in demand will raise a good's price and a fall in demand will lower it. That is all you need to know-general equilibrium analysis is largely unnecessary." Do you agree? How would you use Figure 10.3 to show how changes in demand affect price? Would using this figure tell you more than would using a simple supply-demand diagram?

Figure 10.3

How Perfectly Competitive Prices Bring about Efficiency

Quantity of Y per weelk Efficlent prices (slope -P PP " Inltlal prices (slope -P P) Y. y " AX X* PXI Quantity of X per week