Questions and Answers
What effect does an increase in demand have on equilibrium price, assuming supply remains constant?
What is the consequence of a surplus in the market?
How does the concept of elasticity affect supply and demand?
What describes a situation where supply exceeds demand in detail?
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When there is a shift in supply curve to the right, what is the likely outcome?
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Study Notes
Increase in Demand and Equilibrium Price
- An increase in demand, with constant supply, leads to a rise in equilibrium price.
- Higher demand means consumers are willing to purchase more at existing prices, creating upward pressure on prices until a new equilibrium is established.
Consequence of a Surplus in the Market
- A surplus occurs when supply exceeds demand, resulting in excess goods available.
- Sellers may lower prices to clear surplus inventory, driving prices down to reach a new equilibrium.
Concept of Elasticity in Supply and Demand
- Elasticity measures how much quantity supplied or demanded responds to changes in price.
- High demand elasticity indicates consumers are highly responsive to price changes, while low elasticity shows they are less sensitive.
- Supply elasticity indicates how easily producers can adjust output in response to price changes.
Situation Where Supply Exceeds Demand
- A situation where supply exceeds demand is characterized by a surplus.
- This often occurs when production exceeds consumer purchasing power, leading to unsold goods and downward pressure on prices.
- It typically results in market inefficiencies and potential losses for producers.
Shift of Supply Curve to the Right
- A rightward shift in the supply curve signifies an increase in supply due to factors like improved technology or reduction in production costs.
- The likely outcome includes lower equilibrium prices and a higher equilibrium quantity as more goods are available for sale.
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Description
This quiz explores key concepts from the Demand, Supply, and Equilibrium Price chapter for Class 11 West Bengal Board. You'll assess the impact of changes in demand and supply, and how elasticity affects these economic principles. Test your understanding of surplus conditions and the outcomes of shifts in supply curves.
