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Market Equilibrium — Economics STD 12 Humanities & Commerce — Question

Rajasthan BoardEnglish MediumSTD 12 Humanities & CommerceEconomicsMarket Equilibrium4 Marks
Question
Market for a good is in equilibrium. There is simultaneous "decrease" both in demand and supply but there is no change in market price. Explain with the help of a schedule how it is possible.
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Answer

Price D S After Simultaneous decrease
      D S
3 100 200 50 100
2 150 150 75 75
1 200 100 100 50
The market is in equilibrium when price is Rs. 2 per unit because at this price demand equals supply. For price to remain unchanged after "decreases", the decrease in both must be by the same percentage. In, the above table there is 50 percent decrease both in demand and supply. Therefore new equilbrium is also at a price of Rs. 2 per unit.

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