ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Excess demand will cause the price to rise, and as price rises producers are willing to sell more, thereby increasing output.

Detailed explanation-2: -With excess demand, consumers want to purchase more units of a good than producers want to sell. When price is below equilibrium and the product sells out quickly, competition among consumers, along with recognition by producers that they could raise price and still sell all units, leads to upward pressure on prices.

Detailed explanation-3: -Increased prices typically result in lower demand, and demand increases generally lead to increased supply. However, the supply of different products responds to demand differently, with some products’ demand being less sensitive to prices than others.

Detailed explanation-4: -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-5: -Excess Demand occurs when the Price of a good is lower than the Equilibrium Price, meaning more consumers will want to buy the good than suppliers are willing to sell. The difference between the Quantity Demanded (QD) and the Quantity Supplied (QS) is the Excess Demand.