Show with diagrams the effects of shifts (changes) in demand and supply on equilibrium price.

Effects of Shifts in Demand and Supply on Equilibrium Price. So far we have discussed effects of change in price on demand and supply of a commodity. Now we shall study converse of it, i.e., effects of shift (change) in demand and supply on equilibrium price of a commodity. Shift in demand or supply means increase or decrease in demand or supply. Mind, graphically shift in demand means shift of demand curve. We have seen that equilibrium price is the one at which quantity demanded equals quantity supplied assuming factors other than the price to be constant. But in real world, price does not remain stable rather it moves up or down all the time because of changes in factors other than the price. Such factors responsible for change in case of demand are price of related goods, income and taste of consumers etc. and in case of supply are price of factor inputs, technological progress and excise duty rates etc. So whenever there is shift in demand or supply, new equilibrium emerges in price and quantity. We discuss below the effects of shifts (changes, i.e., increase or decrease) in demand and supply on equilibrium price and quantity under the following heads: (Remember, shifts in demand/supply means increase or decrease in demand/supply at a given price, i.e., shift occurs due to change in factors other than the price of the commodity.)

1.    Shift (change) in demand only (shift of demand curve).

2.    Shift (change) in supply only (shift of supply curve).

3.    Simultaneous shift (change) in demand and supply.

(a) Simultaneous increase in demand and supply.

(b) Simultaneous decrease in demand and suppl