X and Y are complementary goods. Explain the sequence of effects of a fall in the price of X on an equilibrium price and quantity of Y.(All India 2011)
In case of complementary goods, when the price of X falls, demand for commodity V increases. Asa result, demand curve of commodity Y will shift towards right, but supply curve remains constant. Due to increase in demand of commodity Y due to competition amongst the buyers there will be an excess demand.
Therefore, supplier will motivate to increase the price of commodity Y due to competition amongst the buyers. An equilibrium price and quantity would tend to increase.
The above figure shows a situation of increase in demand. The demand curve shifts to rightward. Consequently, equilibrium price and quantity both are increasing from OP to OP1, and OQ to OQ1
Effects of increase in demand :
The given diagram shows a situation of increase in demand. The demand curve shifts to the right from DD to D1D1 An equilibrium point shifts from E to Ey1Consequently, an equilibrium price and an equilibrium quantity rises from OP to OP, and OQ to OQ1 respectively.
The chain effects of increase in demand When there is a increase in demand it creates excess demand (equal to O Q2) at initial price OP and as a result of which price will rise. With rise in price, demand will start falling (according to Law of Demand) and supply will start rising (according to Law of Supply), this process will continue till the time we reach new equilibrium level at £v where there is no excess demand.
Explain why an equilibrium price of a commodity is determined at that level of output at which its demand equals its supply.
State whether the following statement is true or false. Give reason.
When equilibrium price of a good is less than its market price, there will be competition among the sellers.
How will an increase in the income of buyers of an ‘inferior goods', affect its equilibrium price and equilibrium quantity? Explain with the help of a diagram. [CBSE 2006]
With the help of diagram, explain the effects of decrease in demand of a commodity on its equilibrium price and quantity. (Delhi 2009)
Explain the sequence of changes that will take place when there is excess demand of the commodity.(All India 2011)
or
At a given price, there is an excess demand for a good. Explain how the equilibrium price will be reached. (Delhi 2007)
Explain the effects of a ‘price floor'. [CBSE Sample Paper 2014] Or
What are the effects of ‘price – floor' (minimum price ceiling) on the market of a good? Use diagram.
Explain the changes that will take place when in a market the demand for a good is greater than supply at the prevailing price. (Delhi 2010 c)
How are equilibrium price and quantity affected when income of the consumers
Under what condition increase in demand would not make any effect on equilibrium quantity?
Suppose the price of a good is higher than equilibrium price. Explain the changes that will establish equilibrium price. (Delhi 2009 c)
How is an equilibrium price of a commodity affected by a leftward shift of the demand curve? Explain it with the help of a diagram. (All India 2007)
Market of a commodity is in equilibrium. Demand for the commodity ‘increases.’ Explain the chain of effects of this change till the market again reaches equilibrium. Use diagram. (Delhi 2014; All India 2014)
How is an equilibrium price of a commodity determined ?Explain with the help of demand and supply schedule(Delhi 2009)
or
Explain how market price of a good is determined.Use diagram(All India 2009 c)
or
How is price determined under perfect competition? Explain briefly(All India 2006)
Market for good is an equilibrium.Explain the chain of reactions in the market if the price is(i) Higher than an equilibrium price (ii) Lower than an equilibrium price (All India 2012)
What happens to equilibrium price of a commodity if there is an ‘increase' in its demand and decrease' in its supply?
What would be an effect on equilibrium price and quantity when demand and supply both increase at the same rate? [CBSE 08, 08C] Or
Explain with the help of a diagram a situation when demand and supply curves shift to the right but equilibrium price remains the same.
[AI 2007] Or
Market for a good is in equilibrium. What is the effect on equilibrium price and quantity if both the market demand and the market supply of the goods increase in the same proportion? Use diagram. [CBSE 2008]
How does an equilibrium price of a normal commodity change when income of its buyers falls? Explain the chain of effects. (All India 2010)
or
A product market is in an equilibrium. Suppose the demand for the product decreases. What changes will take place in the market? Use diagram. (Delhi 2006 C)
Effects of Change in Demand On Equilibrium Increase in demand will shift the demand curve to the right keeping supply constant, it will lead to increase in equilibrium price and quantity and vice-versa . However,
At a given price of a commodity, there is an excess supply. Is it an equilibrium price? If not, how will an equilibrium price be reached? Use diagram.(Compartment 2014; All India 2006)
or
What is ‘excess supply of a good in a market? Explain its chain of effects on the market for that good. Use diagram. (Foreign, 2014)
If an equilibrium, price of a good is greater than its market price, explain all the changes that will take place in the market. Use diagram. (hots; All India 2013)
How will a fall in the price of tea affects an equilibrium price of coffee? Explain the chain of effects (Delhi 2011 c)
What will happen if the price prevailing in the market is
(i) Above the equilibrium price?
(ii) Below the equilibrium price?
[6 Marks] Or
How price and quantity are determined in the market when number of firms are fixed? Or
How is equilibrium price of a commodity determined? (Use diagram).
[CBSE 2004C; AI 07, 09] Or
Explain why equilibrium price is determined at the level of output at which its demand is equal to its supply. [CBSE 2010C]
Or
How will equilibrium price be reached when there is excess demand/excess supply? Explain with diagram. [CBSE 2004, 07; AI 2004] Or
With the help of a suitable diagram, explain the process of determination of equilibrium price of a commodity under perfectly competitive market.
[CBSE Sample Paper 2003] Or
Market for a good is in equilibrium. Explain the chain of reactions in the market if the price is
(i) higher than equilibrium price and
(ii) lower than equilibrium price. [AI 2012]
A severe drought results in a drastic fall in the output of wheat. Analyse how will it affect the market price of wheat?
What would be an effect on equilibrium price and quantity when demand and supply both shifts rightward?
Or
What would be an effect on equilibrium price and quantity when there is simultaneous increase in demand and supply? [AI 2008] Or
"If the demand and supply of a commodity both increase, the equilibrium price may not change, may increase, may decrease."Explain using diagrams.
Or [CBSE Sample Paper 2003]
Market for a good is in equilibrium. There is simultaneous "increase"both in demand and supply of the good. Explain its effect on market price. [CBSE 2012]
How will an increase in an income of the buyers of an inferior good, affect its equilibrium price and equilibrium quantity? Explain with the help of a diagram.(All India 2006)
Effects of a Simultaneous Change in Demand and Supply on Equilibrium Price and Quantity
Explain the changes that take place when at a given price of a commodity, there is excess supply of it. Use diagram. (Delhi 2006 C)
Market for a good is in an equilibrium. There is simultaneous decrease both in demand and supply, but there is no change in market price. Explain with the help of a schedule, how is it possible.(All India 2012)
Explain the term market equilibrium. Explain the series of changes that will take place if market price is higher than an equilibrium price. (Delhi 2011 c)
Market for a product is in equilibrium. Demand for the product decreases. Explain the chain of effects of this change till the market again reaches equilibrium. Use diagram.(Delhi 2014, All India 2014)
How is an equilibrium price and an equilibrium quantity of a normal commodity is affected by an increase in an income of the buyers? Explain with the help of a diagram. (Delhi 2006)
Using supply and demand curves, show how an increase in the price of shoes affects the price of a pair of socks and the number of pairs of socks bought and sold.
Or
How will a rise in price of complementary affect the equilibrium price of given commodity? Explain the chain of effects.
What will be the effect on equilibrium price and equilibrium quantity, when:
Explain the effects of increase in income of buyers of normal commodity on its equilibrium price. (Delhi 2010)