Asked by Blake Archer on May 16, 2024
Verified
Consider the market for a good that is initially in equilibrium.Which of these is most likely to occur if both demand and supply for this good increases during a particular point in time?
A) Equilibrium price will increase
B) Equilibrium price will decrease
C) Equilibrium quantity will increase
D) Equilibrium quantity will decrease
E) Both equilibrium price and equilibrium quantity will decrease
Demand and Supply Increases
A situation where both the demand and supply for a good or service rise, affecting its market equilibrium.
Equilibrium Price
The market price at which the quantity of goods supplied equals the quantity of goods demanded.
Equilibrium Quantity
The amount of products or services available matches the amount requested at the prevailing market rate.
- Grasp the idea of balance in the market and how shifts in supply and demand impact the equilibrium price and volume.
- Evaluate market situations to ascertain the impact of supply and demand changes on the directional adjustment of equilibrium price and quantity.
Verified Answer
GV
Gigie VergaraMay 22, 2024
Final Answer :
C
Explanation :
When both demand and supply increase, it is likely that the equilibrium price will stay the same or may increase slightly due to the increase in demand, but the equilibrium quantity is definitely going to increase as both buyers and sellers are willing to trade more of the good at the prevailing price. Therefore, the correct answer is choice C.
Learning Objectives
- Grasp the idea of balance in the market and how shifts in supply and demand impact the equilibrium price and volume.
- Evaluate market situations to ascertain the impact of supply and demand changes on the directional adjustment of equilibrium price and quantity.
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