The time period in this market is so short that supply can be increased or decreased by changing the variable factors only. In this market, time period is just sufficient for the producer to increase the output by fully utilizing the existing capacity.
It is clear from the given figure that the initial demand curve DD and initial supply curve SQ intersect at each other on the E0. Therefore, OP value is determined. Since the producer can change the variable factors to a degree and the supply can change, the new supply curve is SPS. With increase in demand, new demand curve D1D1 intersects SPS supply curve at Ex and new price is OP and supply of quantity increases from OQ to OQ1.
The time period in this market is so short that by changing only the variable factors, the supply can be increased or decreased. In this market, time period is just sufficient from the manufacturer to increase the production by using the full potential of the current capacity.
