Question

Microeconomics # 1

Illustrate the effects of changes in determinants of demand and supply upon

market equilibrium.

Answer 1

CHANGES IN DEMAND IN MARKET EQUILIBRIUM

1. A change in demand can cause equilibrium value and output to vary in the same direction
2. A decrease in demand an cause a discount within the equilibrium value and amount of a decent
3. The decrease in demand causes excess offer to develop at the initial value
4. Excess supply can cause the value to fall and as value falls producers are willing to produce less of the nice their by decreasing the output.
5. A raise in demand can cause an equilibrium within the equilibrium value and amount of decent.
6. The raise in demand causes excess demand to develop at the initial value.

CHANGES IN SUPPLY IN MARKET EQUILIBRIUM

1. A change in supply can cause equilibrium value and output to vary in opposite directions
2. A raise in supply can cause a discount within the equilibrium value associate degreed an inase in the equilibrium amount of a decent
3. The raise in supply creates associate degree excess supply at the initial value
4. Excess supply can cause the value to fall amount demanded to extend
5. The decrease in supply creates associate degree demand at the initial value
6. Excess demand causes the value to raise and amount demand to decrease.