identify how the described changes will affect equilibrium price and equilibrium quantity
-There is an increase in the preference for a good that coincides with an increase in the wages for labor to produce the good.

Question

Quizplus · Accepted Answer

An increase in preference for a good shifts the demand curve to the right, increasing both equilibrium price and quantity. However, an increase in wages for labor (a production cost) shifts the supply curve to the left, increasing price but decreasing quantity. The net effect on quantity is indeterminate because it depends on the relative magnitudes of the shifts in demand and supply, but the price will definitely increase.

Identify How the Described Changes Will Affect Equilibrium Price and Equilibrium