If the demand and supply both increase equally,then the equilibrium price ________ and the equilibrium quantity ________.
A) increases; increase
B) increases; does not change
C) does not change; increases
D) increases; decreases
E) decreases; does not change

Question

Quizplus · Accepted Answer

When both demand and supply increase equally, the equilibrium quantity will definitely increase but the effect on equilibrium price will be ambiguous because the two forces are pushing in opposite directions. However, since the equilibrium quantity must increase, it eliminates choices B, D, and E. Therefore, the only plausible answer is C, where equilibrium price remains the same and equilibrium quantity increases.

If the Demand and Supply Both Increase Equally,then the Equilibrium