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]
As we know inferior goods are those whose quantity demanded varies inversely with the change in income. As given in the examination problem if income of a consumer increases and good consumed is inferior good, equilibrium price and equilibrium quantity both fall. It can be shown with the help of the following figure. In the given figure price of inferior goods is measured on vertical axis and quantity demanded and supplied is measured on horizontal axis. Initially, the equilibrium price is OP and equilibrium quantity is OQ.
But as given in the examination problem when income of a consumer increases, the demand of inferior goods also falls shifting the demand curve to the left from DD to D1D1 With new demand curve D1D1, there is excess supply at initial price OP because at price OP demand is PB and supply is PA; so, there is excess supply of AB at price OP.
Due to this excess supply, competition among the producer the price fall. Due to fall in price, there is downward movement along the demand curve (Expansion in demand) from B to C and similarly, there is downward movement along the supply curve (Contraction in supply) from A to C. So, finally, the equilibrium price falls from OP to OP1, and equilibrium quantity also falls from OQ to OQ1 Conclusion
Due to increase in income of buyer for inferior goods,
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.
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.
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]
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]
The demand and supply of a commodity both decreases in the same proportion. Explain its effects on an equilibrium price and quantity with the help of a diagram.(All India 2008)
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)
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]
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]
What would be an effect on equilibrium price and equilibrium quantity if demand and supply both fall at the same rate?
Or
Market for a good is in 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. [AI 2012]
What is excess demand for a good in a market? Explain its chain of effects on the market for that good use diagram.(Foreign, 2014)
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)
How are equilibrium price and quantity affected when income of the consumers
Give reasons for the following statements:
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)
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)
Under what condition increase in demand would not make any effect on equilibrium quantity?
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)
How is the equilibrium price and equilibrium quantity of a normal commodity affected by an increase in the income of its buyers? Explain with the help of a diagram.
Or [CBSE 2006]
Explain the effect of increase in income of buyers of a ‘normal' commodity on its equilibrium price. [CBSE 2010]
What happens to equilibrium price of a commodity if there is an ‘increase' in its demand and decrease' in its supply?
With the help of demand and supply schedule, explain the meaning of excess demand and its effects on price of a commodity. (All India 2009)
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)
What happens to equilibrium price of a commodity if there is ‘decrease' in its demand and increase' in its supply?
Market for a good is in equilibrium. There is increase in demand for goods. Explain the chain of effects of this change. Use diagram.
Or [CBSE 2011] How does an increase in demand of a commodity affect its equilibrium price and equilibrium quantity? Explain with the help of a diagram.
Or ‘ [CBSE 2005]
How will equilibrium price and quantity be affected when there is rightward shift of demand curve? [CBSE 2004, 07C; AI 05]
What will be the effect on equilibrium price and equilibrium quantity, when:
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)
How will a fall in the price of tea affects an equilibrium price of coffee? Explain the chain of effects (Delhi 2011 c)
How will a fall in price of tea affect the equilibrium price of coffee? Explain the chain of effects. [CBSE 201 IQ]
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,
Market for a good is in an equilibrium. Suppose supply decreases. Giving reasons,
explain its effects on equilibrium price and quantity. Use diagram.(Foreign 2014; Delhi 2009 C)
Market for a good is an equilibrium. There is an increase in supply for this good.
Explain the chain of effects of this change. Use diagram(All India 2011)
With the help of diagram, explain the effects of decrease in demand of a commodity on its equilibrium price and quantity. (Delhi 2009)
Under what condition increase in demand would not make any effect on equilibrium price?
Explain the effects of a price ceiling'. [CBSE Sample Paper 2014] Or Explain the effects of maximum price ceiling' on the market of a good. Use diagram. [CBSE 2015]
Market for a good is in equilibrium. There is increase in supply for this goods. Explain the = chain of effects of this change. Use diagram.
[AI2011]
Or
How will equilibrium price and quantity be affected when there is increase in supply?
Or [AI 2005]
Explain the chain effect of increase in supply of a good on its price, supply and demand. Use diagram. [CBSE 05]
Or
How does an increase in supply of a commodity affect its equilibrium price and equilibrium quantity? Explain with the help of a diagram.
[CBSE 2005, OS] Or
Market for a good is in equilibrium. Supply of the good ‘increases'. Explain the chain of effects of this change. [CBSE 2015, AI 2015]
How does the equilibrium price of a ‘normal' commodity change when income of its buyers fall? Explain the chain of effects. [CBSE 2010, AI 2010]
Suppose the price of a good is higher than equilibrium price. Explain the changes that will establish equilibrium price. (Delhi 2009 c)