Figure 4.7
-If demand and supply rise in Figure 4.7,then the equilibrium

Question

Quizplus · Accepted Answer

When demand and supply rise, the equilibrium quantity will definitely increase. However, the effect on price cannot be predicted with certainty as it will depend on the magnitude of the increase in demand and supply. If the increase in demand is greater than the increase in supply, then the price will rise, whereas if the increase in supply is greater than the increase in demand, then the price will fall. But since we cannot determine which one will be greater, the safe choice is to say that quantity will rise.

Figure 4.7 -If Demand and Supply Rise in Figure 4.7,then the Equilibrium