Suppose demand increases and supply increases.Which of the following will happen?

Question

Quizplus · Accepted Answer

When both demand and supply increase, the equilibrium quantity will definitely increase, as both buyers and sellers are willing to buy and sell more goods at the current market price. However, it is uncertain what will happen to the equilibrium price as it depends on the magnitude of the shifts in both curves. If the increase in demand is greater than the increase in supply, then the equilibrium price will increase. On the other hand, if the increase in supply is greater than the increase in demand, then the equilibrium price will decrease. Therefore, we cannot say for certain whether the equilibrium price will increase or decrease, but we can say with certainty that the equilibrium quantity will increase.

Suppose Demand Increases and Supply Increases