What will happen if the price prevailing in the market is
(i) Above the equilibrium price?
(ii) Below the equilibrium price?

6

(a)

How are equilibrium price and quantity affected when income of the consumers.
(i) Increase? (ii) Decrease?

6

(a)

Using supply and demand curves, show how an increase in the price of shoes affects the price of a pair of socks and the number of pairs of socks bought and sold.

6

(a)

If at a given price of the commodity there is excess supply, how will the equilibrium price be reached? Explain with the help of a diagram.

6

(a)

Market for a good is in equilibrium. There is increase in supply for this goods. Explain the chain of effects of this change. Use diagram.

6

(a)

On 19 December 2013, the following news item was printed in the Economic Times: Households in Southern India prefer to eat oranges for breakfast as banana plantations in Kerala have been destroyed and price of apples and grapes have also risen. Use a diagram and economic theory to analyse the impact of the rise in price of apples and grapes on the market of oranges.

6

(a)

How price and quantity are determined in the market when number of firms are fixed?

6

(a)

How is equilibrium price of a commodity determined? (Use diagram).

6

(a)

How will equilibrium price be reached when there is excess demand/excess supply? Explain with diagram.

6

(a)

With the help of a suitable diagram, explain the process of determination of equilibrium price of a commodity under perfectly competitive market.

6

(a)