If both the supply of and the demand for a good increase simultaneously, quantity increases but the effect on equilibrium price is indeterminate.

Question

Quizplus · Accepted Answer

When both supply and demand increase, the quantity of the good sold will definitely increase because there are more goods available and more desire for those goods. However, the effect on price is indeterminate without knowing the relative magnitudes of the shifts in supply and demand. If the increase in demand is larger than the increase in supply, prices could rise. Conversely, if the increase in supply is larger than the increase in demand, prices could fall.

If Both the Supply of and the Demand for a Good