Answer to Question #269920 in Microeconomics for Taqdes

Question

Suppose in winters demand of dry fruits increases. Further supply of dry fruit increases due to favorable environmental condition. Explain with the help of demand and supply curve, how price and quantity will respond

Answer 1

The link between the quantity of goods or services that producers want to sell at various prices and the quantity that customers want to buy in economics is known as supply and demand. When producers supply the same amount of a good as buyers desire, the market is in equilibrium.

When market forces that is demand and supply both rise, the amount of items sold rises with them. The price of a product will remain stable if supply and demand both rise at roughly the same rate. Prices will rise if demand grows faster than supply. Prices will fall if supply expand more than demand.

As the demand for dry fruits rises in the winter. As the supply of dry fruit grows due to favourable weather conditions, the price of dry fruits will increases from P₁ to P₂ as well as the quantity will also increases from Q₁ to Q₂. As a result demand curve shifts rightward from D₁ to D₂ and equilibrium price and quantity also change from e₁ to e₂.