Asked by alberto castilleja on Jul 30, 2024
Verified
Consider the market for a good that is initially in equilibrium.Which of the following is most likely to happen if supply increases by a smaller amount than the increase in demand?
A) Equilibrium price will fall and equilibrium quantity will rise.
B) Equilibrium price will rise and equilibrium quantity will fall.
C) Both equilibrium price and equilibrium quantity will rise.
D) Equilibrium price will rise but the change in equilibrium quantity is indeterminate.
E) Both equilibrium price and equilibrium quantity will fall.
Equilibrium Price
The price at which the quantity of a product demanded by consumers equals the quantity supplied by producers, leading to market stability.
Equilibrium Quantity
The amount of products or services available that matches the amount requested at the price where supply and demand balance.
Supply Increases
A situation where the quantity of a good or service that producers are willing to supply at a certain price rises.
- Apprehend the essence of market balance and the influence of changes in supply and demand on the equilibrium price and quantity.
- Observe market trends to discern the consequences of adjustments in supply and demand on the directional change in equilibrium price and quantity.
Verified Answer
Learning Objectives
- Apprehend the essence of market balance and the influence of changes in supply and demand on the equilibrium price and quantity.
- Observe market trends to discern the consequences of adjustments in supply and demand on the directional change in equilibrium price and quantity.
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