market for a good is in equibrium .There is a simuntaniously 'increase' both demand and supply but there is no change in price. Explain how is it possible. Use schedule
With a simultaneous increase in both the demand and supply, it is possible that the equilibrium market price may not change. This happens under a situation where both demand and supply increase in the same proportion. In such a case, only the equilibrium quantity rises while, the equilibrium price remains unchanged.
The following schedule explains this.
Price
(Rs)
Initial Demand
Initial Supply
Final Demand
Final Supply
10
10
30
14
34
8
15
25
19
29
6
20
20
24
24
4
25
15
29
19
2
30
10
34
14
In the above schedule, initial equilibrium price is Rs 6 where both demand and supply are equal to 20 units.
Now suppose both demand and supply increase in the same proportion that is, by 4 units. Again, the equilibrium price is established at Rs 6 where both demand and supply equal at 24 units.