Question

Explain the process of market adjustment when demand for commodity x increases and demand for commodity y decreases.

Answer 1

Answer:

Market demand is the demand for a commodity in the market. ... Such a decrease in demand and increase in supply resulted by an effective ... This self-adjusting mechanism pulls the price back to the equilibrium level. ... Similarly, the quantity corresponding to this point on the X-axis is termed as the equilibrium quantity.

Answer 2

At this price, the market forces of demand and supply work in harmony and the market is said to be in equilibrium. But what happens in the case of excess demand or excess supply? ... Evidently, in a perfectly competitive market equilibrium is visualised at a point where market supply ..