Supply, Demand and Equilibrium Price Essay Example | Topics and Well Written Essays - 1000 words

Supply, Demand and chemical equilibrium Price - Essay ExampleShe does nothing but allows the trade forces to adjoin the hurts. This way the market acquire curve will move from D to D2. A new equilibrium will now be formed as consequence where Supply curve meets D2 curve. At this stage the quantity will be great than the initial equilibrium quantity demanded will be 8000 and the impairments will be greater $4.5 depending on the strength of the market demand. Some of the increased demand will be absorbed by the increase in price and equilibrium quantity supplied to the market will remain 8000 pies. This will result in increase in revenue for Mrs. Acres and consequently the increase the profits. Therefore, Mrs. Acres will choose this excerption if other selections are not yielding better results than this one in terms of profits and revenue. However, by choosing this option her position will be vulnerable in the long- motivate and she can expect to lag in the broad perspective. In the long run, high prices will encourage competition to read the market and upshot some of the market share by keeping prices lower than competitors. As a result of this, in the long-run, her quantity supplied will be less than 8000, as charging high price will result in market share being lost to consumers. Similarly, as a result her sales may in addition experience a negative trend and she may lose proscribed in the long run by raising prices. In other words, after the initial gain of increased revenue followed by increased, prices she may end up inviting a lot of competition to the industry and may lose out in the long run. The price of the pies will decline and come back to the normal equilibrium price of $4.5. In the long-run, the equilibrium price and quantity will be different because new companies can enter the market, whereas in the short-run, no new firms can enter the market. As a result of this long-run cause of this will be different than short run effects.Cas e 2 Mrs. Acres decides to increase communicate to meet additional demandCase 2 Mrs. Acres meets the Market DemandIn this option suppose, the initial quantity is again 8000, represented by the label q1 on the diagram at a place where demand and supply meet. However, in order to meet the demand, Mr. Acres decides to increase the staff and in turn the supply. This will mean that there will be not increase in the price but the quantity demanded will now rise to q2, which is greater than 8000 pie. In the long-run, her sales and price will remain constant quantity depending on the market trend and depending on the type of competition that exist in the market. However, since she is meeting demand there is no room for competitors to enter the market unless they come up with an wicked product. Therefore, by choosing this option she is discouraging the competition in the market which is going to keep her profits and revenues constant in the long run also and she may continue to enjoy the su ccess in the long-run also. And the best thing here is that she will have to share profits with no one alike(p) she has to do in the option 3. Here, in the long-run, no new company can enter the market because there is no space in the market as Shelly Acres is operating under the streamlined conditions of both allocative and productive efficiency as a result in the long-run, there will be no other effect and short-run conditions will prevail. If the