ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -If there is an increase in supply for goods and services while demand remains the same, prices tend to fall to a lower equilibrium price and a higher equilibrium quantity of goods and services.

Detailed explanation-2: -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.

Detailed explanation-3: -A decrease in demand and an increase in supply will cause a fall in equilibrium price, but the effect on equilibrium quantity cannot be determined. 1. For any quantity, consumers now place a lower value on the good, and producers are willing to accept a lower price; therefore, price will fall.

Detailed explanation-4: -As the equilibrium price increases, the potential producer surplus increases. As the equilibrium price decreases, producer surplus decreases. Shifts in the demand curve are directly related to producer surplus. If demand increases, producer surplus increases.

Detailed explanation-5: -The equilibrium is the only price where quantity demanded is equal to quantity supplied. At a price above equilibrium, like 1.8 dollars, quantity supplied exceeds the quantity demanded, so there is excess supply.