ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -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.

Detailed explanation-2: -If demand and supply change in the same direction, the change in the equilibrium output can be determined, but the change in the equilibrium price cannot. a. If both demand and supply increase, there will be an increase in the equilibrium output, but the effect on price cannot be determined.

Detailed explanation-3: -It’s a fundamental economic principle that when supply exceeds demand for a good or service, prices fall. When demand exceeds supply, prices tend to rise.

Detailed explanation-4: -If the price is above the equilibrium level, then the quantity supplied will exceed the quantity demanded. Excess supply or a surplus will exist. In either case, economic pressures will push the price toward the equilibrium level.