If both the demand and supply increase, the equilibrium quantity__________and the equilibrium price__________ .

Question

Quizplus · Accepted Answer

When both demand and supply increase, it is certain that the equilibrium quantity will increase. However, the effect on equilibrium price is ambiguous as it might rise, fall, or remain unchanged depending on the comparative extent to which demand and supply have increased. Therefore, the best choice is A as it indicates the certain increase in equilibrium quantity but acknowledges the uncertainty in the direction of change in equilibrium price.

If Both the Demand and Supply Increase, the Equilibrium Quantity__________and