Exhibit 3-4
-When both supply and demand shift right at the same time,
A)the change in equilibrium price cannot be predicted, but the change in equilibrium quantity can be predicted.
B)the change in both equilibrium price and equilibrium quantity can be predicted.
C)the change in equilibrium price can be predicted, but the change in equilibrium quantity cannot be predicted.
D)neither the change in equilibrium price nor equilibrium quantity can be predicted.
E)either the equilibrium price or equilibrium quantity will change, but not both.

Question

Exhibit 3-4 
-When both supply and demand shift right at the same time,
A)the change in equilibrium price cannot be predicted, but the change in equilibrium quantity can be predicted. 
B)the change in both equilibrium price and equilibrium quantity can be predicted. 
C)the change in equilibrium price can be predicted, but the change in equilibrium quantity cannot be predicted. 
D)neither the change in equilibrium price nor equilibrium quantity can be predicted. 
E)either the equilibrium price or equilibrium quantity will change, but not both.

Quizplus · Accepted Answer

When both supply and demand increase, it leads to a definite increase in the equilibrium quantity because both forces push the quantity in the same direction. However, the effect on price is ambiguous without knowing the relative magnitudes of the shifts in supply and demand.

Exhibit 3-4 -When Both Supply and Demand Shift Right at the Same