Equilibrium of Demand and Supply:
The price of
a commodity in the market is determined by the interaction of the forces of
demand and supply. By "demand for a commodity" at a given price is meant:
know that if the price rises, other things remaining the same,
people buy less of that commodity and if price falls, people buy
more of that commodity.
Just as we have discussed the
effects of changes in demand on price, we can also explain the
effects of changes in supply on the equilibrium price.
We have so far discussed the effects of changes in demand and
supply on equilibrium price separately. Let us now consider a
case in which changed in demand and supply take place,