Question

Three completely different real world examples of ceteris paribus violations of supply or demand conditions in markets.

Show the invisible hand's reaction. Do prices change?

Summarize the changes in prices and quantities

Answer 1

ceteris paribus means other remaining constant. like in law of demand when price of a comodity falls then demand for that comodity rises keeping other things constant .

three real world examples fornthe violation of ceteris Paribus are as follows:-

1)during the time of great depression when the demand for oil dropped from 87 million to 85 million then according to law pf demand the price should fall with decrease in demand but rises from $87 per barrels to $110 per barrels at that time span.

2) overproduction of foodstuff in india . according to law of supply when supply of a product rises when there is rise in price. but there is excess supply of food itmes in india with decrease in the price level.

3) when the united states started digging the oil into on own off shores but still the prices didn't decline because of the presence of other factors like environmental laws enacted at that time.

ii) yes , prices changes due to invisible hand whenever there is excess demand and excess supply , price rise or decline till equlibirium is reached.this occurs due to invisible hand which at play whenever there is imbalance in the market. it raises the price in tue case of excess demand amd lowers the demand when there is excess supply.

iii) for example when there is in the quantity demanded due to change in taste and preference of the consumer then then due to less demand the prices will automatically change this is the force of invisible hand . according to Adam smith market forces automatically in order to bring the market in equilibrium by changing the quantity or prices