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23 September, 2021

Changes in Market Equilibrium

 If a market is in equilibrium and any of the conditions determining demand or supply change, then market forces will establish a different equilibrium price and/or equilibrium quantity. This would be reflected by a shift in the supply or demand curve and a resulting change in the point at which the two curves intersect.

 If supply rises and demand rises, then the equilibrium quantity will rise but the equlilibrium price is indeterminate.

If supply rises and demand falls, then the equilibrium price will fall but the equilibrium quantity is indeterminate.

If supply falls and demand rises, then the equilibrium price will rise but the equilibrium quantity is indeterminate.

If supply falls and demand falls, then the equilibrium quantity will fall but the equlilibrium price is indeterminate.