Question

Given the following information, identify the equilibrium price and quantity.

Price (₹)	Demand (Units)	Supply (Units)
10	1000	5000
9	2000	4000
8	3000	3000
7	4000	2000

What will happen if the market price is:

1. ₹ 10
2. ₹ 7

Answer 1

Equilibrium occurs where demand = supply.

From the table:

At Price ₹ 8,

Demand = 3000 units

Supply = 3000 units

So, the equilibrium price is ₹ 8 and the equilibrium quantity is 3000 units.

i. At ₹ 10,

Demand = 1000

Supply = 5000

Excess supply = 5000 – 1000 = 4000 units

Surplus in the market → Downward pressure on price

ii. At ₹ 7,

Demand = 4000

Supply = 2000

Excess demand = 4000 – 2000 = 2000 units

Shortage in the market → Upward pressure on price