Economic

How market equilibrium effect the supply and demand

Market equilibrium is a situation in which there is no tendency to change ( unless demand or supply change). The equilibrium occur at a price at which the quantity demand is equal to the quantity supplies. The graph in below show the concept of market equilibrium.

In the article we can know the price of flour increase and this will cause the demand curve shift inward and become a new equilibrium. Below graph is show about the new equilibrium point.

From the graph above, we can know that the market equilibrium of supply have to increase. When the price of flour increase the demand of bread also will decrease because it make the price of bread increase. The supplies will hold the stork to make more profit and the pp curve of flour will shift outward means Qd will bigger than Qs It will become shortage and the price of flour will increase. This will make a new equilibrium point.

Beside, when the price of flour increase will effect the market of equilibrium of bread. when the price of flour increase will make the price of bread also increase and this will cause a new equilibrium for bread. The below graph will show the market equilibrium graph.

From the graph above, we know that the demand of bread are decreasing. When the price of flour increase means that the production of cost bread will increase. This will cause the price of bread increase. The consumer will reduce to buy the bread and this will make the demand decrease means pp curve shift inward. It will be shortage. This will be a new equilibrium in bread.