Assume both the demand for,and the supply of,Athlon 2 GHz processors increase.Which of the following outcomes is certain to occur?

Question

Quizplus · Accepted Answer

If both demand and supply increase, the equilibrium quantity is certain to rise. However, the effect on equilibrium price is uncertain as it depends on the relative magnitude of the shifts in demand and supply. If the increase in demand is greater than the increase in supply, then the equilibrium price will rise. If the increase in supply is greater than the increase in demand, then the equilibrium price will fall. Therefore, option A and C are not certain outcomes, and option E is not applicable. Option D is not possible since both demand and supply are increasing.

Assume Both the Demand For,and the Supply Of,Athlon 2 GHz