Exogenous changes can never affect both the demand and supply curves.

Question

Quizplus · Accepted Answer

Exogenous changes, such as changes in government policy or natural disasters, can affect both the demand and supply curves. For example, a drought that affects crop yields (supply curve) may also lead to increased demand for water (demand curve) as farmers struggle to irrigate their crops. Similarly, a change in tax policy (exogenous change) could affect both the demand and supply of certain goods. Exogenous changes, such as changes in weather or government regulation, can affect both the demand and supply curves. For example, a government regulation that restricts the use of certain ingredients in food production can decrease the supply of those products, while also changing consumer preferences and decreasing demand.

Exogenous Changes Can Never Affect Both the Demand and Supply