Use the following diagram to answer the following questions.

-Refer to Coffee. Suppose the demand for coffee increases from D₁ to D₂. The new equilibrium price and quantity are:

Question

Use the following diagram to answer the following questions.
 
-Refer to Coffee. Suppose the demand for coffee increases from D₁ to D₂. The new equilibrium price and quantity are:

Quizplus · Accepted Answer

An increase in demand from D₁ to D₂ will cause an increase in both equilibrium price and quantity. Therefore, Option A is incorrect because it suggests that the equilibrium quantity stays the same. Option B is also incorrect because it suggests that the new equilibrium quantity is larger than it actually would be. Option D is incorrect because Q₃ is not a feasible quantity. Option C is the only choice that correctly identifies both the new equilibrium price (P₂) and the new equilibrium quantity (Q₂) as being higher than the previous equilibrium (P₁ and Q₁, respectively).

Use the Following Diagram to Answer the Following Questions