For this paper I will focus on the demand side of Supply and Demand. The "law of demand" states that, all other variables remaining the same, the higher the price, the less the quantity demanded. So as the prices change because of a change in supply for a commodity, buyers will change the quantity they demand of that item. For example, if the price drops, a larger quantity will be demanded and if the price rises, a lesser quantity will be demanded. .
Any example of decreased price leads to movement down the demand curve when there is an increase in quantity demanded. The increased price leads to movement up the demand curve, and a decrease in quantity demanded. The following are some factors that would cause the demand curve to shift and they are as follow: a change in the population of buyers, greater desire for the commodity, higher incomes (assuming a normal good), lower incomes (assuming an inferior good), an increased price of substitutes, a decreased price of complements, and an expectation of higher future prices. This increased demand will show as a shift of the entire demand curve to the right. The reverse of all the above will lead to decreased demand and will show as a shift of the entire demand curve to the left. .
In regards to Pe and Qe the overall effect is that the shifts move Pe in opposite directions (which one prevails depends on the relative magnitudes of the shifts) therefore the change in Pe is indeterminate. With that, the shifts move Qe in the same direction therefore the change in Qe is clear and Qe increases. In other words, the increase in demand, all other things equal, leads to an increase in Pe and an increase in Qe. A decrease in demand, all other things equal, leads to a decrease in Pe and a decrease in Qe. .
.
Article: "Software - Will Outsourcing Hurt America's Supremacy".
Business Week, March 1, 2004.
The article mentioned above takes a look at the current trend of many US companies towards the outsourcing of high tech jobs such as computer programmers, to the of countries India, China, and several eastern block countries.
