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CA Foundation · Business Economics · Price Determination in Different Markets

In a perfectly competitive market, the demand and supply schedules are given by QD = 600 - 10P and QS = 200 + 30P. Subsequently, a rise in consumer incomes raises demand to QD = 800 - 10P, with supply unchanged. By how much does the equilibrium price rise?

The equilibrium price rises by ₹5. Originally, setting 600 - 10P equal to 200 + 30P gives a price of ₹10. After demand shifts, 800 - 10P equals 200 + 30P gives ₹15. The difference between the two equilibrium prices is ₹5.

  1. A₹5Correct
  2. B₹10
  3. C₹15
  4. D₹20

Explanation

Initially 600 - 10P = 200 + 30P gives 40P = 400, so P = 10. After the shift, 800 - 10P = 200 + 30P gives 40P = 600, so P = 15. The rise is ₹5. Taking the new price of ₹15 itself as the change is the common slip.

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