In the above diagram, given the demand (D) and the supply (S), the equilibrium price and the equilibrium quantity are PAge and QE. At a price above PE www.datingranking.net/nl/asiandating-overzicht, such as P2, the quantity supplied (QD) and this results in a surplus (QS – QD). As the price falls, the quantity demanded rises and the quantity supplied falls and this process continues until the price falls to PE where the quantity demanded and the quantity supplied are equal at QE. At PE, the quantity demanded is equal to the quantity supplied. There is neither surplus nor shortage and hence there is no incentive for firms to change the price.
In the above diagram, an increase in the demand (D) from D0 to Dstep step one leads to a rise in the price (P) from P0 to P1 and a rise in the quantity (Q) from Q0 to Q1. 0) and the supply (S0), the price and the quantity are P0 and Q0. 0 to D1, although the quantity demanded rises at the same price (P0), the quantity supplied remains at Q0 and this results in a shortage. When firms do not produce enough to sell, they can raise the price without losing sales. Therefore, they will do so to increase their profits. As the price rises, the quantity demanded falls and the quantity supplied rises and this process continues until the price rises to P1 where the quantity demanded and the quantity supplied are equal at Q1. Continue reading “S) is greater than the quantity demanded (Q”