what price the consumer is willing to pay for a commodity in state of equilibrium explain through conditions
Answers
Answer:
If supply and demand remain unchanged, then it leads to a state of equilibrium. If supply increases and demand remains unchanged, then it leads to lower equilibrium price. If supply decreases and demand remains unchanged, then it leads to a higher equilibrium price.
Explanation:
Consider there are 5 packets of chips in a market and there is a need for 5 packets, the price will remain constant but if there is an increase in supply the shopkeeper has 10 packets of chips but the demand is same, the price will fall because the demand is 5 packets people won't be ready to buy the good at the same price. Hence, the shopkeeper will have to lower the price to sell all his products and equilibrium will fall if there is more supply than demand. Similarly, the opposite, if there are 2 packets of chips and the need is 5 packets then everyone will want to buy that product because there is a need , and where demand (need ) grows, the price(equilibrium) rises.