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How is the price of a commodity affected when its demand increases more than supply?

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Solution

When increase in demand is more than increase in supply. The demand curve will shift more towards the right from DD to D1D1 than the supply curve from SS to S1S1. In the given case the equilibrium quantity as well as the equilibrium price will increase, but the increase in equilibrium price is lesser than the increase in equilibrium quantity.
1093538_958415_ans_8ceff98d226c4f53a0e87a9191a806e2.jpg

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