Need help with the following 3 questions
- A market is in equilibrium with equilibrium quantity Q and equilibrium price P.
What happens to P* if there is an decrease in demand?
What happens to Q* if there is an increase in demand and a decrease in supply?
(What happens to P* if there is an increase in supply followed by a decrease in demand followed by another increase in supply?
- A market is in equilibrium with equilibrium quantity Q and equilibrium price P.
What happens to P* if there is an increase in supply?
What happens to Q* if there is a decrease in supply and a decrease in demand?
What happens to P* if there is an increase in demand followed by a decrease in supply followed by another increase in demand?
3.A market is in equilibrium with equilibrium quantity Q and equilibrium price P.
What happens to P* if there is a decrease in supply?
What happens to Q* if there is an increase in supply and an increase in demand?
What happens to P* if there is a decrease in demand followed by an increase in supply followed by another decrease in demand?
Answers (1)
What happens to P if there is an decrease in demand? ------P falls.
What happens to Q if there is an increase in demand and a decrease in supply? Q falls.
(What happens to P if there is an increase in supply followed by a decrease in demand followed by another increase in supply?-- First P falls, then P falls again and then P falls again.
What happens to P if there is an increase in supply? ----P falls
What happens to Q if there is a decrease in supply and a decrease in demand? Q falls
What happens to P if there is an increase in demand followed by a decrease in supply followed by another increase in demand? ----P rises, rises again and then rises further
3.A market is in equilibrium with equilibrium quantity Q and equilibrium price P.
What happens to P if there is a decrease in supply? -----P increases
What happens to Q if there is an increase in supply and an increase in demand?---Q increases
What happens to P if there is a decrease in demand followed by an increase in supply followed by another decrease in demand?-----P falls, then P falls further and then P falls again.
Note : in all these questions, the meaning of a change in demand or a change supply is taken to be a chamge in the demand or supply at the existing equilibrium price and we are not told about a shift in the demand curve or supply curve at different prices.