Asked by Hoala Chock on Jul 26, 2024
Verified
Consider the market for a good that is initially in equilibrium.For a given upward-sloping supply curve,an increase in demand will typically:
A) increase price but quantity could change in either direction.
B) increase quantity but price could change in either direction.
C) increase price but leave quantity unchanged.
D) decrease both quantity and price.
E) increase both quantity and price.
Upward-Sloping Supply Curve
A graphical representation indicating that an increase in price results in an increase in the quantity of goods supplied.
Market Demand
The relation between the price of a good and the quantity purchased by all consumers in the market during a given period, other things constant; sum of the individual demands in the market.
- Learn about the theory of market equilibrium and the agents that drive it towards stability.
- Absorb the influence of demand modifications on the equilibrium state of the market.
Verified Answer
DS
dhruv sonavaneAug 01, 2024
Final Answer :
E
Explanation :
An increase in demand will shift the demand curve to the right, causing an increase in both the equilibrium price and quantity. The upward-sloping supply curve ensures that both price and quantity will increase in this scenario. Therefore, the best choice is E: increase both quantity and price.
Learning Objectives
- Learn about the theory of market equilibrium and the agents that drive it towards stability.
- Absorb the influence of demand modifications on the equilibrium state of the market.
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