Question

Explain the effect of rightward shift of demand curve on equilibrium price and quantity when the number of firms in the market is fixed you suitable diagram for your answer

Answer 1

Answer:

As a result equilibrium price remains unchanged. When both demand and supply of a commodity increase the equilibrium quantity will increase but equilibrium price mayor may not be affected. There may be following three situations (I) The equilibrium price will remain the same, If demand and supply of a commodity increase in equal ratio

(ii) Equilibrium price will rise, if both demand and supply increase but Increase in demand is more than the increase in supply.

(iii) Equilibrium price will fall, if both demand and supply increase but the increase in demand is less than increase in supply.

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Answer 2

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