ECONOMICS
DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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demand and supply both increase
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demand remains constant and supply decreases
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supply increases proportionally more than demand increases
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supply remains constant and there is a expansion in demand
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Detailed explanation-1: -Effectively, both equilibrium price and quantity tend to increase. When the increase is demand is less than the increase in supply, the right shift of the demand curve is less than the right shift of supply curve. In this case, the equilibrium price falls whereas the equilibrium quantity rises.
Detailed explanation-2: -An increase in supply, all other things unchanged, will cause the equilibrium price to fall; quantity demanded will increase. A decrease in supply will cause the equilibrium price to rise; quantity demanded will decrease.
Detailed explanation-3: -If demand increases and supply remains unchanged, a shortage occurs, leading to a higher equilibrium price. If demand decreases and supply remains unchanged, a surplus occurs, leading to a lower equilibrium price. If demand remains unchanged and supply increases, a surplus occurs, leading to a lower equilibrium price.