list any 5 of the 11 causes that can result in a shift in the market...

list any 5 of the 11 causes that can result in a shift in the market equilibrium

Solutions

Expert Solution

• Market equilibrium occurs at a point where the quantity demanded is equal to the Quantity supplied.

•Following can be the causes of shift in market Equilibrium

1) Increase in market demand

An increase in market demand will shift the demand curve to the right. Given a rightward shift in demand curve and no shift in the Supply curve ,a new market Equilibrium will be established.

At this Equilibrium the new Equilibrium price and Equilibrium quantity will be higher as compared to the old market Equilibrium.

2) Decrease in market demand

A decrease in demand will shift the demand curve to the left . Given a leftward shift in demand curve and ni Shift in supply curve , a new market Equilibrium will be established.

At this new market Equilibrium both new Equilibrium price and Equilibrium quantity will be less than that of the original Equilibrium.

3) Increase in market supply

An increase in market supply will shift the supply curve to the right. Given a rightward shift in supply curve and no shift in demand curve,a new market Equilibrium will be established.

At this new market Equilibrium ,new Equilibrium price will be less than the old Equilibrium price and new Equilibrium Quantity will be more than the old Equilibrium quantity.

4) Decrease in market supply

A decrease in market supply will shift the Supply curve to the left. Given a leftward shift in supply curve and no shift in demand curve , a new market Equilibrium will be established.

At new market Equilibrium, new Equilibrium price will be higher than the old Equilibrium price and new Equilibrium Quantity will be lower than the old Equilibrium quantity.

5) Equal Increase in both demand and supply

An increase in both demand and supply curve will shift the demand and supply curve to the right.Given an equal increase in both demand and supply curve ,a new market Equilibrium will be achieved

At this new market Equilibrium the Equilibrium price wil remain the same as that of earlier market Equilibrium and the Equilibrium quantity will be greater than the earlier.

Rahul Sunny answered 1 year ago

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