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Changes in DD & SS

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Jasmine Jegan
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9 views20 pages

Changes in DD & SS

Uploaded by

Jasmine Jegan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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CHANGES IN DEMAND

AND SUPPLY
MARKET EQUILIBRIUM
❖ Market equilibrium is when quantity demanded =
quantity supplied.
❖ The Equilibrium price is the market price at which the
quantity of a product demanded is equal to its quantity
supplied.
❖ The Equilibrium quantity is the quantity demanded and
supplied both will be same at equilibrium price. In this
case there will neither be an oversupply nor a shortage.
GRAPHICAL REPRESENTATION
EXAMPLE
PRICE OF QUANTITY QUANTITY CONDITION
APPLES (IN DEMANDED (IN Kgs) SUPPLIED (IN Kgs)
₹)
40 100 60 Excess Demand

45 90 70 Excess Demand

50 80 80 Equilibrium

55 70 90 Excess Supply

60 60 100 Excess Supply


▪
CHANGES IN DEMAND AND SUPPLY
Always Supply and Demand do not change in an individual manner.
There is simultaneous change in demand and supply.
▪ Conditions:
1. Increase in Demand and Increase in Supply

❖ Increase in Demand = Increase in Supply

❖ Increase in Demand > Increase in Supply

❖ Increase in Demand < Increase in Supply

2. Decrease in Demand and Decrease in Supply

❖ Decrease in Demand = Decrease in Supply

❖ Decrease in Demand > Decrease in Supply

❖ Decrease in Demand < Decrease in Supply


CHANGES IN DEMAND AND SUPPLY
3. Increase in Demand and Decrease in Supply

❖ Increase in Demand = Decrease in Supply


❖ Increase in Demand > Decrease in Supply
❖ Increase in Demand < Decrease in Supply
4. Decrease in Demand and Increase in Supply

❖ Decrease in Demand = Increase in Supply


❖ Decrease in Demand > Increase in Supply
❖ Decrease in Demand < Increase in Supply
INCREASE IN DEMAND AND SUPPLY
1. Increase in Demand = Increase in Supply

• The equilibrium price remains


the same.
• The equilibrium quantity rises.
• Effect of Equilibrium Point is
Rightward shift.
2. Increase in Demand is Greater than Increase in Supply
▪ It results in Relatively Excess
Demand.
▪ Both equilibrium price and
quantity tend to increase.
▪ Effect of Point is Rightward
shift.
3. Increase in Demand is lesser than Increase in Supply
▪ It results to Relatively
excess supply.

▪ The equilibrium price falls


whereas the equilibrium
quantity rises..
DECREASE IN DEMAND AND SUPPLY
1.Decrease in Demand = Decrease in Supply

▪ The equilibrium price


remains the same but
there is a decrease in
the equilibrium
quantity.
▪ Effect of Equilibrium
point is Leftward shift.
2. Decrease in Demand is Greater than Decrease in Supply
▪ The demand curve shifts
more towards left relative to
the supply curve.
▪ There is a fall in both
equilibrium quantity and
price.
3. Decrease in Demand is lesser than Decrease in Supply
▪ There is a rise in
equilibrium price
accompanied by a
fall in equilibrium
quantity.
▪ The Effect of
Equilibrium point is
Leftward shift.
INCREASE IN DEMAND AND DECREASE IN SUPPLY
1. Increase in Demand = Decrease in Supply
▪ The equilibrium
quantity remains the
same however the
equilibrium price rises.

▪ Effect of Equilibrium
point is Upward shift.
2. Increase in Demand is Greater than Decrease in Supply
▪ Both equilibrium
quantity and price rise.

▪ The Effect of
Equilibrium point is
Rightward shift.
3. Increase in Demand is lesser than Decrease in Supply

• Equilibrium quantity falls


whereas the equilibrium
price rises.
• Effect of Point is
Leftward shift.
DECREASE IN DEMAND AND INCREASE IN SUPPLY
1. Decrease in Demand = Increase in Supply
▪ It results to relatively
excess supply.
▪ The equilibrium quantity
remains the same but the
equilibrium price falls.
▪ Effect of Equilibrium
point is Downward shift.
2. Decrease in Demand is Greater than Increase in Supply

• Both the equilibrium


quantity and price
falls.
• Effect of Point is
Leftward shift.
3. Decrease in Demand is lesser than Increase in Supply
• The equilibrium
quantity rises whereas
the equilibrium price
falls.
• Effect of Equilibrium
point is Rightward shift.
CONCLUSION
❖ A Market for a product is said to be in equilibrium when
the quantity demanded = quantity supplied.
❖ Simultaneous change in Demand and Supply arises by
following conditions:
1. Increase in Demand and Increase in Supply
2. Decrease in Demand and Decrease in Supply
3. Increase in Demand and Decrease in Supply
4. Decrease in Demand and Increase in Supply
Thank You

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