-markets and equilibrium-

Question 1

What is market equilibrium?

Answer 1

A state of balance between market demand and supply, i.e there is no excess supply or demand.

Question 2

Why happens to market equilibrium when demand increases?

Answer 2

The new equilibrium price would also rise, along with supply.

Question 3

What happens to market equilibrium when supply increases?

Answer 3

The new equilibrium price would decrease and demand would increase.

Question 4

Shifts in the supply and demand curves:

Answer 4

When supply increases, the curve shifts right.
When supply decreases, the curve shifts left.
When demand increases, the curve shifts right.
When demand decreases, the curve shifts left.

Question 5

Shifts in market equilibrium:

Answer 5

When demand increases, equilibrium prices increases along with equilibrium quantity.
When demand decreases, equilibrium price decreases, along with equilibrium quantity.
When supply increases, equilibrium price decreases, equilibrium quantity higher.
When supply decreases, equilibrium price increases, equilibrium quantity decreases