SELECT * FROM question_mgmt as q WHERE id=10292 AND status=1 SELECT id,question_no,question,chapter FROM question_mgmt as q WHERE courseId=3 AND subId=60 AND chapterId=612 and ex_no='1' AND status=1 ORDER BY CAST(question_no AS UNSIGNED) CBSE Free NCERT Solution of 12th micro-economics Market Equilibrium what will happen if the price prevailing in the ma

Question:

What will happen if the price prevailing in the market is?

i. Above the equilibrium price

Ii. Below the equilibrium price

Answer:

(i) if the market price is above the equilibrium price, there occurs the situation of excees supply. The equilibrium price and quantity is demoted by pe and qe. Let us assume that the market price (P1) is above the equilibrium price pe. Now, according to the demand curve, the quantity demanded is qd. Whereas, according to the supply curve, the quantity supplied is qs. Thus, there exists a situation of excees supply equivalent to (qs-qd).

(ii) if the market price is below the equilibrium price, there occurs the situation of excees demand. Let us assume that the market price P2 is below the equilibrium price pe. According to the demand curve, quantity demanded is q d. whereas, according to the supply curve, the quantity supplied is qs. So, it can be seen that there emerges the situation of excees supply equivalent to (qd – qs).


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