ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A surplus exists if the quantity of a good or service supplied exceeds the quantity demanded at the current price; it causes downward pressure on price.

Detailed explanation-2: -An increase in demand and a decrease in supply will cause an increase in equilibrium price, but the effect on equilibrium quantity cannot be detennined. 1. For any quantity, consumers now place a higher value on the good, and producers must have a higher price in order to supply the good; therefore, price will increase.

Detailed explanation-3: -A decrease in demand will cause the equilibrium price to fall; quantity supplied will decrease. 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-4: -If the demand curve shifts to the right, demand increases, leading to a higher equilibrium price. A shift to the right would result in a rise to the equilibrium, meaning higher prices.