S Kumaraperumal

Equilibrium between demand and supply

Law of demand fall in price, Q Price demanded rises and vice versa Law of supply industry will offer more Q of goods when price is higher PH than at a lower price
Demand Excess Supply Equilibrium point ExcessDemand Quantity Supply

Equilibrium the level of price at which the demand and supply curve intersect each other will finally come to stay in the market

P PL

Equilibrium between demand and supply

At eq price both parties

Law of demand fall in price, Q demanded rises and vice versa Law of supply industry will offer more Q of goods when price is higher than at a lower price

satisfied
If price Eq price then some of
the sellers may not able to sell all
Dispose at lower price Price go down to meet eq price

Equilibrium If Eq price price the buyers the level of price at would not able to get the which the demand and required Q supply curve intersect each Ready to buy at higher price other will finally come to Price goes up to meet Eq price stay in the market

Time element in theory of price

Price determinants are both demand, supply and time( Marshall) Both demand and supply depends on time that allowed price to adjust Supply takes time to adjust itself to a change in the demand condition time categories market period short period long period

Determination of market price

Market period
Very short period Supply is fixed

Perishable goods inelastic perfectly vertical straight line

Price supply

Supply is limited to existing stock of the good Change in demand produces changes in price when supply is constant
Q

Demand

Determination of market price

Market period
When price of durable goods are decrease with decrease in demand Supply can be decreased by keeping source quantity in inventory Supply can be increased out of the given stock if its demand and price increase

durable goods inelastic perfectly vertical straight line

Price supply
Max Price (entire Supply offer for sale)

Demand Reserve price O Q

Firms will stop to supply till they get price that cover their Short run price (short variable costs supply period normal price)
Price MPS SRS

Determination of market price

Firms keep producing even if they are not able to cover ATC
Demand

If not they lose their fixed cost

Price is determined by both supply and demand

Determination of market price

Long run price (normal price)

Determined by long run equilibrium

Firms will stop to supply till they get price that cover their variable costs
supply Price SRS

Demand

Price is determined by both supply and demand