(i) Market equilibrium refers to that point which has come to be established under a given condition of demand and supply and has a tendency to stick to that level, i.e. where Demand = Supply.
(ii) If due to some disturbance we divert from our position the economic forces will work in such a manner that it could be driven back to its original position, i.e., where Demand = Supply. In short it is the position of rest.
(iii) It can be explained with the help of following schedule and diagram:
(a) (i) In the below schedule market equilibrium is determined at Price 3 where Market demand is equal to Market Supply.
(ii) At price 1 and 2, there is excess demand, which leads to rise in price, resulting tendency is expansion in supply.
(iii) Similarly, at price 4 and 5, there is excess supply, which leads to fall in price, resulting tendency is Contraction in supply.

(b) (i) In the given diagram, price is measured on vertical axis, whereas quantity demanded and supply is measured on horizontal axis.

(ii) Suppose that initially the price in the market is P₁. At this price, the consumer demand P₁B and the producer supply P₁ A, i.e. consumers want more than what the producer are willing to supply. There is excess demand equal to AB. So, price cannot stay on P₁ as excess demand will create competition among the buyers and push the price up till we reach equilibrium.
Due torise in price from P₁ to P, there is upward movement along the supply curve (expansion in supply) from A to E and upward movement along the demand curve (contraction in demand) from B to E.
(iii) Similarly, at price P₂, the quantity demanded P₂K is less than the quantity supplied P₂L. There is excess supply, equal to KL, which will create competition among the sellers and lower the price. The price will keep falling as long as there is an excess supply. 
Due to fall in price from P₂ to P there is downward movement along the supply curve (contraction in supply) from L to E and downward movement along the demand curve (expansion in demand) from K to E.
(iv) The situation of zero excess demand and zero excess supply defines market equilibrium (E). Alternatively, it is defined by the equality between quantity demanded and quantity supplied. The price P is called equilibrium price and quantity Q is called equilibrium quantity.

(i) Market equilibrium refers to that point which has come to be established under a given condition of demand and supply and has a tendency to stick to that level, i.e. where Demand = Supply.
(ii) If due to some disturbance we divert from our position the economic forces will work in such a manner that it could be driven back to its original position, i.e., where Demand = Supply. In short it is the position of rest.
(iii) It can be explained with the help of following schedule and diagram:
(a) (i) In the below schedule market equilibrium is determined at Price 3 where Market demand is equal to Market Supply.
(ii) At price 1 and 2, there is excess demand, which leads to rise in price, resulting tendency is expansion in supply.
(iii) Similarly, at price 4 and 5, there is excess supply, which leads to fall in price, resulting tendency is Contraction in supply.

(b) (i) In the given diagram, price is measured on vertical axis, whereas quantity demanded and supply is measured on horizontal axis.

(ii) Suppose that initially the price in the market is P₁. At this price, the consumer demand P₁B and the producer supply P₁ A, i.e. consumers want more than what the producer are willing to supply. There is excess demand equal to AB. So, price cannot stay on P₁ as excess demand will create competition among the buyers and push the price up till we reach equilibrium.
Due to rise in price from P₁ to P, there is upward movement along the supply curve (expansion in supply) from A to E and upward movement along the demand curve (contraction in demand) from B to E.
(iii) Similarly, at price P₂, the quantity demanded P₂K is less than the quantity supplied P₂L. There is excess supply, equal to KL, which will create competition among the sellers and lower the price. The price will keep falling as long as there is an excess supply. 
Due to fall in price from P₂ to P there is downward movement along the supply curve (contraction in supply) from L to E and downward movement along the demand curve (expansion in demand) from K to E.
(iv) The situation of zero excess demand and zero excess supply defines market equilibrium (E). Alternatively, it is defined by the equality between quantity demanded and quantity supplied. The price P is called equilibrium price and quantity Q is called equilibrium quantity.

(i) Market equilibrium refers to that point which has come to be established under a given condition of demand and supply and has a tendency to stick to that level, i.e. where Demand = Supply.
(ii) If due to some disturbance we divert from our position the economic forces will work in such a manner that it could be driven back to its original position, i.e., where Demand = Supply. In short it is the position of rest.
(iii) It can be explained with the help of following schedule and diagram:
(a) (i) In the below schedule market equilibrium is determined at Price 3 where Market demand is equal to Market Supply.
(ii) At price 1 and 2, there is excess demand, which leads to rise in price, resulting tendency is expansion in supply.
(iii) Similarly, at price 4 and 5, there is excess supply, which leads to fall in price, resulting tendency is Contraction in supply.

(b) (i) In the given diagram, price is measured on vertical axis, whereas quantity demanded and supply is measured on horizontal axis.

(ii) Suppose that initially the price in the market is P₁. At this price, the consumer demand P₁B and the producer supply P₁A, i.e. consumers want more than what the producer are willing to supply. There is excess demand equal to AB. So, price cannot stay on P₁ as excess demand will create competition among the buyers and push the price up till we reach equilibrium.
Due to rise in price from P₁ to P, there is upward movement along the supply curve (expansion in supply) from A to E and upward movement along the demand curve (contraction in demand) from B to E.
(iii) Similarly, at price P₂, the quantity demanded P₂K is less than the quantity supplied P₂L. There is excess supply, equal to KL, which will create competition among the sellers and lower the price. The price will keep falling as long as there is an excess supply. 
Due to fall in price from P₂ to P there is downward movement along the supply curve (contraction in supply) from L to E and downward movement along the demand curve (expansion in demand) from K to E.
(iv) The situation of zero excess demand and zero excess supply defines market equilibrium (E). Alternatively, it is defined by the equality between quantity demanded and quantity supplied. The price P is called equilibrium price and quantity Q is called equilibrium quantity.

(i) Market equilibrium refers to that point which has come to be established under a given condition of demand and supply and has a tendency to stick to that level, i.e. where Demand = Supply.
(ii) If due to some disturbance we divert from our position the economic forces will work in such a manner that it could be driven back to its original position, i.e., where Demand = Supply. In short it is the position of rest.
(iii) It can be explained with the help of following schedule and diagram:
(a) (i) In the below schedule market equilibrium is determined at Price 3 where Market demand is equal to Market Supply.
(ii) At price 1 and 2, there is excess demand, which leads to rise in price, resulting tendency is expansion in supply.
(iii) Similarly, at price 4 and 5, there is excess supply, which leads to fall in price, resulting tendency is Contraction in supply.

(b) (i) In the given diagram, price is measured on vertical axis, whereas quantity demanded and supply is measured on horizontal axis.

(ii) Suppose that initially the price in the market is P₁. At this price, the consumer demand P₁B and the producer supply P₁A, i.e. consumers want more than what the producer are willing to supply. There is excess demand equal to AB. So, price cannot stay on P₁ as excess demand will create competition among the buyers and push the price up till we reach equilibrium.
Due torise in price from P₁ to P, there is upward movement along the supply curve (expansion in supply) from A to E and upward movement along the demand curve (contraction in demand) from B to E.
(iii) Similarly, at price P₂, the quantity demanded P₂K is less than the quantity supplied P₂L. There is excess supply, equal to KL, which will create competition among the sellers and lower the price. The price will keep falling as long as there is an excess supply. 
Due to fall in price from P₂ to P there is downward movement along the supply curve (contraction in supply) from L to E and downward movement along the demand curve (expansion in demand) from K to E.
(iv) The situation of zero excess demand and zero excess supply defines market equilibrium (E). Alternatively, it is defined by the equality between quantity demanded and quantity supplied. The price P is called equilibrium price and quantity Q is called equilibrium quantity.

When the price of apples and grapes rises, consumers will substitute with these fruits with the relatively cheaper oranges. Thus, demand for oranges will increase and the demand curve shifts rightwards from DD to D₁D₁

With new demand curve D₁D₁ there is excess demand at initial price OP because at price OP demand is PB and supply is PA; so there is excess demand of AB at price OP. Due to this excess demand, competition among the consumer will raise the price. With the rise in price there is upward movement along the demand curve (contraction in demand) from B to C and similarly, there is upward movement along the supply curve(expansion in supply) from A to C. so, finally, equilibrium price rises from OP to OP₁ and equilibrium quantity also rises from OQ to OQ₁
Note: Therefore,the equilibrium price of ranges increases and the equilibrium quantity also increases when the price of apples and grapes rises in Southern India.
Value: Analytic

As given in the examination problem that market for a good is in equilibrium. So, we assume that initial price is OP as shown in given figure:

In the given figure price is on vertical axis and quantity demanded and supplied is on horizontal axis. But due to increase in supply the supply curve shifts rightward from SS to S₁S₁, With new supply curve S₁S₁ there is excess supply at initial price OP because at price OP, supply is PB and demand is PA, so there is excess supply of AB at price OP. Due to this excess supply competition among the producer will make the price fall. Due to this fall in price there is downward movement along the supply curve (Contraction in supply) from B to C and similarly, there is downward movement along the demand curve (Expansion in demand) from A to C. So, finally, equilibrium price falls from OP to OP₁ and equilibrium quantity rises from OQ to OQ₁
Conclusion
Due to increase in supply,
(i) Equilibrium price falls from OP to OP₁
(ii) Equilibrium quantity rises from OQ to OQ₁

If at a given price there is excess supply as shown in the given figure.

In the given figure, the excess supply of AB at price P₁ will create a competition among the producers, which will reduce the price from P₁ to P. It can be explained in the following cases:
(i) Downward movement along the supply curve (Contraction in supply): Due to excess supply of AB, the competition among the producers will reduce the price. As we know, positive relationship exists between price and quantity supplied. So fall in price P₁ to P leads to fall in supply from B to E.
(ii) Downward movement along the demand curve (Expansion in demand): Due to excess supply of AB, the competition among the producers will reduce the price. As we know inverse. relationship exits between price and quantity demanded. So, fall in price from P₁ to P, leads to rise in demand from A to E. It can be explained with the help of the following schedule

In the above schedule at price 5, there is excess supply. This excess supply, leads to fall in price till we reach the equilibrium at price 3.
Note: Contraction in supply and expansion in demand have to be done simultaneously to reach the equilibrium

(i) As we know, shoes and pair of socks are complementary good to each other. As, price of complementary goods are inversely related with the demand of given commodity. So, rise in price of shoes (complementary good) decreases the demand for given commodity (pair of socks), and demand curve shifts leftward as shown in given figure:
I
(ii) In the given diagram, price is on vertical axis and quantity demanded and supplied is on horizontal axis. Initially,the equilibrium price is OP and equilibrium quantity is OQ.
(iii) But due to rise in price of complementary good the demand curve of given commodity shifts leftward from DD to D₁D₁.
(iv) With new demand curve Dp there is excess supply at initial price OP because at price OP demand is PB and supply is PA; so, there is excess supply of AB at price OP.
(v) Due to this excess supply, competition among the producer will fall the price. Due to fall in price, there is downward movement along the demand curve (Expansion in demand) from B to C and similarly there is downward movement along the supply curve (Contraction in supply) from A to C. So, finally, the equilibrium price falls from OP to OP₁ and equilibrium quantity also falls from OQ to OQ₁.
So, due to rise in price of complementary goods,
(a) Equilibrium price falls from OP to OP₁, and
(b) Equilibrium quantity also falls from OQ to OQ₁

(i) Increase in Income: When income increases, demand curve will shift to rightward in case of Normal good as shown below:
(a) As, we know normal goods are those whose quantity demanded varies positively with the change in income. As income of a consumer rises and goods consumed is normal goods equilibrium price and equilibrium quantity both rise. It can be shown with the help of the given figure.

(b) In the given figure, price of normal goods is measured on vertical axis and quantity demanded and supplied are measured on horizontal axis. Initially, the equilibrium price is OP and equilibrium quantity is OQ.
(c) But as given in the examination problem when income of a consumer rises the demand of normal goods increases shifting the demand curve to the right from DD to D₁D_1.
(d)With new demand curve DP₁, there is excess demand at initial price OP because at price OP demand is PB and supply is PA; so there is excess demand of AB at price OP.
(e) Due to this excess demand, competition among the consumer will raise the price. With the rise in price there is upward movement along the demand curve (contraction in demand) from B to C and similarly, there is upward movement along the supply curve(expansion in supply) from A to C . So, finally, equilibrium price rises from OP to OP₁, and equilibrium quantity also rises from OQ to OQ₁
Conclusion
Due to increase in income of a buyer for normal goods,
(a) Equilibrium price rises from OP to OP₁·
(b) Equilibrium quantity also rises from OQ to OQ₁
(ii) Decrease in income: When income decreases, demand curve will shift to leftward in case of Normal good as shown below:
(a) As we know that normal goods are those whose quantity demanded varies positively with the change in income. As given in the examination problem if income of a consumer falls and goods consumed is normal goods, then both equilibrium price and the equilibrium quantity fall. It can be shown with the help of the given figure.

(b) In the given figure, price of normal goods is measured on vertical axis and quantity demanded and supplied are measured on horizontal axis. Initially, the equilibrium price is OP and equilibrium quantity is OQ.
(c) But as given in the examination problem when income of a consumer rises the demand of normal goods increases shifting the demand curve to the right from DD to D₁D₁.
(d) With new demand curve D₁D₁ there is excess demand at initial price OP because at price OP demand is PB and supply is PA; so there is excess demand of AB at price OP.
(e) Due to this excess supply competition among the producer will fall the price. Due to fall in price there is downward movement along the demand curve (Expansion in demand) from B to C and similarly, there is downward movement along the supply curve (Contraction in supply) from A to C. So, finally, the equilibrium price falls from OP to OP₁ and equilibrium quantity also falls from OQ to OQ₁
Conclusion
Due to decrease in income of a buyer for normal goods,
(a) Equilibrium price falls from OP to OP₁
(b) Equilibrium quantity also falls from OQ to OQ₁

(i) Market equilibrium refers to that point which has come to be established under a given condition of demand and supply and has a tendency to stick to that level, i.e. where Demand = Supply.
(ii) If due to some disturbance we divert from our position the economic forces will work in such a manner that it could be driven back to its original position, i.e., where Demand = Supply. In short it is the position of rest.
(iii) It can be explained with the help of following schedule and diagram:
(a) (i) In the below schedule market equilibrium is determined at Price 3 where Market demand is equal to Market Supply.
(ii) At price 1 and 2, there is excess demand, which leads to rise in price, resulting tendency is expansion in supply.
(iii) Similarly, at price 4 and 5, there is excess supply, which leads to fall in price, resulting tendency is Contraction in supply.

(b) (i) In the given diagram, price is measured on vertical axis, whereas quantity demanded and supply is measured on horizontal axis.

(ii) Suppose that initially the price in the market is P₁. At this price, the consumer demand P₁B and the producer supply P₁A, i.e. consumers want more than what the producer are willing to supply. There is excess demand equal to AB. So, price cannot stay on P₁ as excess demand will create competition among the buyers and push the price up till we reach equilibrium.
Due torise in price from P₁ to P, there is upward movement along the supply curve (expansion in supply) from A to E and upward movement along the demand curve (contraction in demand) from B to E.
(iii) Similarly, at price P₂, the quantity demanded P₂K is less than the quantity supplied P₂L. There is excess supply, equal to KL, which will create competition among the sellers and lower the price. The price will keep falling as long as there is an excess supply. 
Due to fall in price from P₂ to P there is downward movement along the supply curve (contraction in supply) from L to E and downward movement along the demand curve (expansion in demand) from K to E.
(iv) The situation of zero excess demand and zero excess supply defines market equilibrium (E). Alternatively, it is defined by the equality between quantity demanded and quantity supplied. The price P is called equilibrium price and quantity Q is called equilibrium quantity.