An increase in demand for oil along with a simultaneous increase in supply of oil will
A) decrease price and increase quantity.
B) increase price and decrease quantity.
C) increase quantity, but whether it increases price depends on how much each curve shifts.
D) increase price, but whether it increases quantity depends on how much each curve shifts.

Question

Quizplus · Accepted Answer

An increase in both demand and supply of oil will increase the quantity of oil being exchanged in the market. However, the effect on price cannot be determined solely based on this information. The price will only increase if the increase in demand is greater than the increase in supply, leading to a rightward shift of the demand curve and an overall increase in price. If the increase in supply is greater than the increase in demand, then the price will decrease due to the leftward shift of the supply curve. Therefore, option C is the best answer as it acknowledges that the quantity will increase, but the effect on price is contingent on the magnitude of the shifts in both curves.

An Increase in Demand for Oil Along with a Simultaneous