1. Definition
- here is no t
T endencyforpr @ qtyt cha (pr &qtya
ice t o nge ice t re
st bl )
ae
- A r is in equil ium w t maketDD cur e a t
maket ibr hen he r v nd he
maketSScur e int sect
r v er

2. Market Equilibrium
- R t t int a ion bet een DD a SSin t maket(Qd = Qs )
efer o he er ct w nd he r
- Pr a t pointofequil ium (equilibrium price)
ice t he ibr
- Qtya t pointofequil ium (equilibrium qtty)
t t he ibr
* the point of equilibrium is not s table or permanent*

3. Condition F or Market Equilibrium
Qd = Qs
W Qd = Qs (maketw lnotbe in equil ium)t
hen, r il ibr his
ma ha in 2 cir a :-
y ppen cumst nces
a E SS(Sur us )
) xcess pl
b)E DD (Shora )
xcess t ge

4.  Exces s S S @ S urplus
Qs > Qd
- T ee impora effect
hr t nt s:-
aP)
b)Qs w lcont a (Qs )
il r ct
c)Qd w lexpa (Qd )
il nd

5.  Exces s DD @ S hortag e
Qd > Qs
- T ee impora effect
hr t nt s:-
aP)
b)Qd w lcont a (Qd )
il r ct
c)Qs w lexpa (Qs )
il nd

6. Determination Of market Equilibrium
- T ee met
hr hods
i)Numer lA l
ica naysis
ii)Ga lA l
r phica naysis
iii)M t t l a l
ahemaica naysis
Qd = Qs
a- bP = c + dP

7. Effects of chang es in DD on M’E
 Increas e DD
DD ; F SS; equil ium P&Qty
ixed ibr t
 Decreas e DD
DD ; F SS; equil ium P&Qty
ixed ibr t

8. Effects of chang es in S S on M’E
 Increas e S S
SS; F DD ; eP; eQ
ixed
 Decreas e DD
SS; F DD ; eP; eQ
ixed

9. Effects of chang es in DD & S S on Equal
Mag nitudes on Market Equilibrium
- F sit t :-
our uaions
a DD &SSin equa ma udes
) l gnit
b) DD &SSin equa ma udes
l gnit
c) DD & SSin equa ma udes
l gnit
d ) DD & SSin equa ma udes
l gnit

10. a DD &SSin equa ma udes
) l gnit
DD & S S ; eQ ; c ons tant eP
b) DD &SSin equa ma udes
l gnit
DD & S S ; eQ ; c ons tant eP

11. c) DD & SSin equa ma udes
l gnit
DD & SS ; eP ; c ons tant eQ
d ) DD & SSin equa ma udes
l gnit
DD & SS ; eP ; c ons tant
eQ