Question

“Recently government has announced many reliefs for manufacturing

sector”. Explain its effect on equilibrium in the economy​

Answer 1

Explanation:

Economic theory suggests that, in a free market there will be a single price which brings demand and supply into balance, called equilibrium price. Both parties require the scarce resource that the other has and hence there is a considerable incentive to engage in an exchange.

Consumers and producers react differently to price changes. Higher prices tend to reduce demand while encouraging supply, and lower prices increase demand while discouraging supply.