Changes in market equilibrium, Microeconomics

Assignment Help:

Changes in Market Equilibrium

Equilibrium prices are known by the associate level of supply and demand.

Supply and demand are decided by particular values of supply & demand determining variables.

Alteration in any one or combination of these variables can result in a change in the equilibrium price and/or quantity.

247_market equilibrium.png

Raw material prices fall 

– S moves to S’

– Surplus @ P1 of Q1, Q2

– Equilibrium @ P3, Q3

1937_market equilibrium1.png

Raw material prices increases

– S moves to S’

– Shortage @ P1 of Q1, Q2

– Equilibrium @ P3, Q3

108_market equilibrium2.png

Income Rises

P D D’ S

– Demand moves to D’ Shortage @ P1 of Q1, Q2

– Equilibrium @ P3, Q3

2042_market equilibrium3.png

Income Reduces

– Demand moves to D’

– Surplus @ P1 of Q1, Q2

– Equilibrium @ P3, Q3 

1046_market equilibrium4.png

Income Rises & raw material prices fall

– The increase in D is more than the increase in S

– Equilibrium price and quantity rise to P2, Q2

719_market equilibrium5.png

Income Increases & raw material prices decreases 

– The rise in D is less than the increase in S

– Equilibrium price reduce to P2and quantity rise to Q2

1010_market equilibrium6.png

Income Decreases & raw material prices decreases 

D’

– The decrease in D is more than the increase in S

– Equilibrium price and quantity lowers to P2 Q2

545_market equilibrium7.png

Income decreases & raw material prices decreases 

– The decrease in D is less than the rise in S

– Equilibrium price reduce  to P2 and quantity increase to Q2


Related Discussions:- Changes in market equilibrium

Theory of production, THEORY OF PRODUCTION: Production activities rela...

THEORY OF PRODUCTION: Production activities related to goods and services require inputs. Typically, the set of inputs includes labour, capital equipments and raw materials. T

Non-existence of objective probability distributions, Non-existence of Obje...

Non-existence of Objective Probability Distributions :   Let us see why expectations are volatile in nature? According to Keynes (1936, pp. 149): "Our knowledge of the fact

Determine the fiscal policy, How might an accurate value for the multiplier...

How might an accurate value for the multiplier aid a government in setting fiscal policy? Any given multiplier will enhance national income at a given rate times enhance in gov

Suggestions - rationale in era of globalisation, Suggestions For the l...

Suggestions For the last 60 years the Bretton Woods institutions have played an essential role in ensuring global financial stability and fostering economic growth and develop

Assignment, Ask qu a.Fill in the column of marginal products. What pattern ...

Ask qu a.Fill in the column of marginal products. What pattern do you see? How might you explain it? b. A worker costs $30 per day and the ''Firm has fixed costs of $10. Use this

Working with supply and demand , When you drop by the only coffee shop in y...

When you drop by the only coffee shop in your neighbourhood, you notice that the price of a cup of coffee has enhanced  considerably since last week.  You decide it's not a big dea

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd