Question

Market for a good is in equilibrium. There is simultaneous 'decrease' both in demand and supply but there is no change in market price. Explain with help of a schedule how it is possible.

Answer 1

A simultaneous decrease in both demand and supply may not influence the market price. This can be illustrated with the help of following schedule:

As seen in the given table, initially, the equilibrium (market) price is rupee 6 per unit and the equilibrium demand and supply is rupee 60 units.
When both demand and supply decrease by 10%, then both demand and supply fall from 60 units to 54 units. It means, at market price of rupee 6, both demand and supply are equal. So, a simultaneous decrease in both demand and supply may not change the market price.