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Effect of increase in demand and supply on equilibrium

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Show the impact on the equilibrium price and quantity that results from; (1) an increase in demand and (2) an increase in supply.

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Solution Summary

Solution describes impact of increase in demand and supply on equilibrium price and quantity with the help of suitable graphs.

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Solution:

In the above graph DD and SS are initial demand and supply curves. The initial equilibrium point at M. Now let us assume that demand curve shifts to ...

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  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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