Related to the Economics in Practice on p. 79: If the supply of generators increases and the demand for generators increases, the equilibrium price for generators ________ and the equilibrium quantity of generators ________.
A) will increase; will decrease
B) will increase; may increase, decrease, or stay the same
C) may increase, decrease, or stay the same; will increase
D) may increase; decrease, or stay the same; may increase, decrease, or stay the same

Question

Quizplus · Accepted Answer

When both supply and demand for a product increase, the equilibrium quantity will definitely increase because there are more goods being produced and more consumers wanting to buy them. However, the effect on price is uncertain without knowing the relative magnitudes of the changes in supply and demand. If the increase in supply is larger than the increase in demand, the price could decrease. If the increase in demand is larger than the increase in supply, the price could increase. If they increase by the same amount, the price might stay the same.

Related to the Economics in Practice on P