Question

12. When the market for wheat is at equilibrium, price of rice falls. If wheat and rice are
substitute commodities, how will the change in price of rice affect the equilibrium in wheat
market? Explain the chain effect.​

Answer 1

Answer:

Draw a line XY, locate point p outside AB. Construct a line passing through P and perpendicular to XY

Answer 2

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. ... A decrease in supply will cause the equilibrium price to rise; quantity demanded will decrease.