Solution : A rise in price of substitues leads to an increase in the demand for the commodity. Hence, the demand curve will shift rightwards. With this increase in demand and supply being the same, equilibrium price will rise with an increase in competition among buyers. This increase in price leads to an increase in supply and a fall in demand. Hence, as a result, equilibrium price and equilibrium quantity rises. Show
If you're seeing this message, it means we're having trouble loading external resources on our website. If you're behind a web filter, please make sure that the domains *.kastatic.org and *.kasandbox.org are unblocked. How is the equilibrium price and equilibrium quantity of a commodity affected when increase is demand is more than increase in supply explain with the help of a diagram?At a higher price quantity demanded will fall and quantity supplied will increase resulting in upward movement along new demand curve and given supply curve. This reduces the gap between quantity demanded and quantity supplied.
How is the equilibrium price and equilibrium quantity of a normal commodity affected by an increase?Increase in price leads to rise in supply and fall in demand and these changes continue till supply and demand become equal at a new equilibrium price so if there is an increase in demand only, equilibrium prices rises.
How are the equilibrium price and quantity of a commodity affected when its supply rises and demand is perfectly elastic?When demand is perfectly elastic, then change in supply does not affect the equilibrium price of the commodity. It only changes the equilibrium quantity. Original Equilibrium is determined at point E, when the perfectly elastic demand curve DD and the original supply curve SS intersect each other.
How is the equilibrium price of a commodity affected by an increase in the supply of the commodity?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.
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How is the equilibrium price and equilibrium quantity of a commodity affected by a rise in the prices of its substitutes explain with diagram?
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