EQUILIBRIUM IN THE VERY SHORT PERIOD (OR) MARKET PERIODENGINEERING ECONOMICS &

FINANCIAL ACCOUNTINGCS FINAL YEAR & IT THIRD YEAR

Dr.K.Baranidharan

Present by…

331-07-2013

Engineering Economics &

Financial Accounting

MANAGERIALECONOMICS

431-07-2013

EQUILIBRIUM IN THE VERY SHORT PERIOD (OR) MARKET PERIOD

• OP as the original market price, OQ the equilibrium quantity demanded and SS as the supply curve of mangoes.

• The supply curve of mangoes for example is fixed in the market period and the supply cannot be increased.

• When the demand for mangoes increase, demand curve DD shifts to D1D1.

• The price of the mangoes goes up from OP to OP1 because the supply is fixes.

• The supply in the market continues to be SS though the demand has increased.

• Because the supply is fixed in the market period, the price rise when the demand increases.

• When the demand decreases, the demand curve shifts to the left.

• Demand curve DD shifts to the left and its D2D2 is the new demand as a result, the price falls.

• Thus, demand decides the price in the market period as the supply is fixes and cannot be altered.

Dr.K.BaranidharanThank you

K YOU

931-07-2013

THE END.

1031-07-2013