Changes in Market Equilibrium

Market equilibrium refers to a situation in which quantity demanded is equal to the quantity supplied, the point at which demand and supply curve meets. 

Increase in Supply results in a right ward shift in supply curve, leading to a new equilibrium point( the intersection point of demand and new supply curve.) 

 

· With the increase in supply, supply curve shifts rightward.

· The new equilibrium point is E1

· It would result in fall in prices and increase in quanity demanded.

Increase in demand results in a right ward shift in demand curve, leading to a new equilibrium point( the intersection point of demand and new supply curve.)

· With the increase in demand, demand curve shifts rightward.

· The new equilibrium point is E1

· It would result in rise in prices and increase in quanity demanded.

Simultanous Increase in demand and supply results in a right ward shift in demand curve and supply curve, leading to a new equilibrium point( the intersection point of demand and new supply curve). The changes in both demand and supply is a real market situation, The supply and demand curve changes as a result of change in market conditions.

· With the simultaneous increase in demand and supply, demand and supply curves shift rightward.

· The new equilibrium point is E1

· Here, It would result in rise in price P1 and increase in quanity demanded Q1.