How is the equilibrium price of a good determined? Explain with the help of a diagram a situation, when both demand and
supply curves shift to the right, but equilibrium price remains the same.
Answers
Answer:
The equilibrium price is the market price where the quantity of goods supplied is equal to the quantity of goods demanded. This is the point at which the demand and supply curves in the market intersect. To determine the equilibrium price, you have to figure out at what price the demand and supply curves intersect.
There are three possible situations of a simultaneous rightward shift of both the demand and supply curves:
(i) When demand increases more than supply, equilibrium price and quantity both will rise.
(ii) When demand and supply increase equally, equilibrium price will remain stable and equilibrium quantity will rise.
(iii) When demand increases less than supply, equilibrium price will fall and equilibrium quantity will rise.
Explanation:
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Answer:
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