Fall in supply - effect on equilibrium price, Managerial Economics

Fall in Supply

1070_fall in supply.png

When the supply falls, the supply curve shifts to the left to position S1S1.  At the initial equilibrium price P1, quantity supplied falls from q1 to q21 but the quantity demanded is still q1. This creates excess of demand over supply which causes price to rise to a new equilibrium level P21 and quantity to fall to a new equilibrium level q21 and quantity to fall to a new equilibrium level q2.

Posted Date: 11/27/2012 6:21:41 AM | Location : United States







Related Discussions:- Fall in supply - effect on equilibrium price, Assignment Help, Ask Question on Fall in supply - effect on equilibrium price, Get Answer, Expert's Help, Fall in supply - effect on equilibrium price Discussions

Write discussion on Fall in supply - effect on equilibrium price
Your posts are moderated
Related Questions
What will be the table of total cost function?


Problem : (a) Describe inflation and discuss its origin using Classical and Keynesian theories. (b) Describe with diagram how can inflation occur in an economy with substant

a. Explain why the demand for a particular brand is more elastic than the demand for all cigarettes. If Lucky Strike raised its price by 1% in 1918, was the price elast

Supply-side policies Supply-side policies are intended to increase the economy's potential rate of output  by increasing the supply of factor inputs, such as labour inputs and

Question: (a) As an advisor to government as well as that to a firm how will you make use of your knowledge on price elasticity of demand, income elasticity and cross price ela

Supplementary Reserve, Requirements/Special Deposit If the Central Bank feels that there is too much money in circulation, it can in addition require commercial banks to mainta

What is Demand theory Demand theory demonstrates the relationship between demand for services andgoods. Demand theory is the building block of demand curve- a curve which estab


Q. Relation between average cost and marginal cost? Relationship between MC and AC are the following: If MC is below AC then AC should be falling. This is because, if MC