Answer to Question #145545 in Microeconomics for Sania riaz

Question

Q.Bring out the effects of following upon
equilibrium price and equilibrium quantity
a. A more rise in demand than supply.
b. A less rise in demand than supply.
c. More decrease in demand than fall in supply.
d. A less fall in demand than decease in supply.
e. more fall in demand but less rise in supply.

Answer 1

$$Solution$$

a) It will cause an increase in the equilibrium price, but the effect on the equilibrium quantity cannot be determined.

b) It will lead to the equilibrium price falling as the as the quantity supplied will decrease too.

c)It will make the equilibrium price to fall and the quantity demanded to increase.

d) It will cause equilibrium price to fall, also the quantity supplied will decrease

e) It will cause a fall in the equilibrium price, but the effect on the equilibrium quantity cannot be determined.