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How does an increase in demand of 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.
How will equilibrium price and quantity of a commodity be affected if demand increases and supply is perfectly inelastic?When demand is perfectly inelastic, then change in supply does not affect the equilibrium quantity. It only changes the equilibrium price. The change may be either an 'Increase in Supply' or 'Decrease in Supply'.
What happens to the equilibrium price and quantity when demand increases and at the same time supply increases but the supply shift is smaller than the demand shift?Upward shifts in the supply and demand curves affect the equilibrium price and quantity. If the supply curve shifts upward, meaning supply decreases but demand holds steady, the equilibrium price increases but the quantity falls.
When the supply of commodity decreases and demand remains unchanged equilibrium quantity will increase?When supply decreases and demand remains unchanged then the equilibrium price tens to rise to bring the market back to equilibrium. When there is a decrease in supply the quantity is reduced from Q1 to Q2 and because there is less quantity supplied prices will increase from P1 to P2 to bring market in equilibrium.
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