Fall in supply - effect on equilibrium price, Managerial Economics

Assignment Help:

Fall in Supply

1070_fall in supply.png

When the supply falls, the supply curve shifts to the left to position S1S1.  At the initial equilibrium price P1, quantity supplied falls from q1 to q21 but the quantity demanded is still q1. This creates excess of demand over supply which causes price to rise to a new equilibrium level P21 and quantity to fall to a new equilibrium level q21 and quantity to fall to a new equilibrium level q2.


Related Discussions:- Fall in supply - effect on equilibrium price

Internal rate of return - incremental analysis, The following contains cost...

The following contains cost and benefit information for two different alternatives for a w capital investment in computerized process technologies to control the process at a manuf

Planned economy, Planned Economy Is a system where all major economic ...

Planned Economy Is a system where all major economic decisions are made by a government ministry or planning organisation. Here all questions about the allocation of resources

Utility, Utility Utility is the amount of satisfaction derived from th...

Utility Utility is the amount of satisfaction derived from the consumption of a commodity or service at a particular time.  Utility is not inherent but a psychological satisfa

Time factor for determinants of demand, Q. Time Factor for Determinants of ...

Q. Time Factor for Determinants of Demand? Price-elasticity of demand depends moreover on the time that consumers take to adjust to a new price: longer the time taken, greater

Effects of fluctuations in exchange rates, Effects of Fluctuations in Excha...

Effects of Fluctuations in Exchange Rates When a country's currency depreciates, exporting firms may have competitive advantage but businesses which rely on imports for raw ma

Income and substitution effects of price change, Income and Substitution Ef...

Income and Substitution Effects of Price Change When the price of a commodity falls the consumer's equilibrium changes.  The consumer can purchase the same quantity of X and Y

Equilibrium income, Equilibrium Income In this model, aggregate desire...

Equilibrium Income In this model, aggregate desired expenditure has three components:  Consumption, Investment and Government Expenditure:

Cost, classification of costs

classification of costs

1, critically analyze the firm''s theory of profit maxmization

critically analyze the firm''s theory of profit maxmization

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