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We would love to personalise your learning journey. Sign Up to explore more. Sign Up or Login Skip for now Uh-Oh! That’s all you get for now. We would love to personalise your learning journey. Sign Up to explore more. Sign Up or Login Skip for now Solution An increase in the income of the buyers of a normal commodity will cause an increase in the demand for the normal commodity. As a result, the demand curve of the commodity will shift to the right. The equilibrium price and equilibrium quantity both increase. In this diagram, the original demand curve DD and the original supply curve SS intersect at point E and determine equilibrium price equal to OP0 and equilibrium quantity OQ0, Now due to an increase in demand, demand curve shifts to the right, i.e., DD to D1D1. The new demand curve D1D1 intersects the given supply curve SS at point E1 where new equilibrium price is OP1 and new equilibrium quantity is OQ1.How is the equilibrium price and equilibrium quantity of a normal commodity affected by an increase in the income of its buyers?Increase in price leads to rise in supply and fall in demand and these changes continue till supply and demand become equal at a new equilibrium price so if there is an increase in demand only, equilibrium prices rises.
How is the equilibrium price and equilibrium quantity of a commodity affected when increase is demand is more than increase in supply explain with the help of a diagram?At a higher price quantity demanded will fall and quantity supplied will increase resulting in upward movement along new demand curve and given supply curve. This reduces the gap between quantity demanded and quantity supplied.
How is the equilibrium price and equilibrium quantity of a commodity affected by a rise in the prices of its substitutes explain with diagram?1 Answer. A rise in price of substitues leads to an increase in the demand for the commodity. Hence, the demand curve will shift rightwards. With this increase in demand and supply being the same, equilibrium price will rise with an increase in competition among buyers.
What happens to equilibrium price and quantity when price increases?If there is an increase in supply for goods and services while demand remains the same, prices tend to fall to a lower equilibrium price and a higher equilibrium quantity of goods and services.
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How is the equilibrium price and equilibrium quantity of a normal commodity affected by an increase?
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