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We would love to personalise your learning journey. Sign Up to explore more. Sign Up or Login Skip for now Uh-Oh! That’s all you get for now. We would love to personalise your learning journey. Sign Up to explore more. Sign Up or Login Skip for now Solution (i) When demand is perfectly elastic and supply decreases, there will be no change in the price but the quantity decreases. In the diagram, when supply decreases from SS to S1S1, price remains constant at OP, but quantity decreases from OQ to OQ1. (ii) When supply is perfectly inelastic and demand increases, the price of the commodity will increase but the quantity remains constant. In the diagram, when demand increases from DD to D1D1, the price also increases from OP to OP1, but quantity remains the same at OQ. (adsbygoogle = window.adsbygoogle || []).push({}); (iii) When demand is perfectly elastic and supply curve shifts to the right, there will be no change in the price but quantity will increase. In the diagram, when supply increases from SS to S1S1, price remains constant at OP, but the quantity increases from OQ to OQ1.How is the equilibrium price of a commodity affected by changes in its supply?When supply of a commodity increases and its demand remains the same, equilibrium price will decrease and equilibrium quantity demanded and supplied will increase. equilibrium price will increase but equilibrium quantity demanded and supplied will decrease. 6.
How does an increase in demand of a commodity affect its equilibrium price and equilibrium quantity?An increase in demand of a commodity results in a rightward shift of demand curve which lead to increase in price. It can be explain by diagram as follow-In the diagram demand and supply of good are equal at point E. So E is equilibrium point. At this point OP is equilibrium price and OQ is equilibrium quantity.
What happens to the market equilibrium price and quantity when there is an increase in demand?An increase in demand, all other things unchanged, will cause the equilibrium price to rise; quantity supplied will increase. A decrease in demand will cause the equilibrium price to fall; quantity supplied will decrease.
How is the equilibrium price of a commodity affected by a decrease in a demand?A decrease in demand will cause the equilibrium price to fall; quantity supplied will decrease. An increase in supply, all other things unchanged, will cause the equilibrium price to fall; quantity demanded will increase. A decrease in supply will cause the equilibrium price to rise; quantity demanded will decrease.
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How are the equilibrium price and quantity of a commodity affected when its supply rises and demand is perfectly elastic?
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