If there is an increase in the demand for automobiles,and at the same time auto workers receive a substantial raise,what will happen to equilibrium price and quantity in the automobile market?
A) Price and quantity will rise.
B) Price and quantity will fall.
C) Price will rise;quantity will fall.
D) Quantity will rise;price change cannot be determined.
E) Price will rise;quantity change cannot be determined.

Question

Quizplus · Accepted Answer

An increase in demand raises both price and quantity, while an increase in production costs (due to higher wages) reduces supply, raising price but reducing quantity. The net effect is a definite increase in price, but the change in quantity is uncertain.

If There Is an Increase in the Demand for Automobiles,and