An increase in demand and an increase in supply will lead to
A) unambiguous increases in both price and quantity.
B) unambiguous decreases in both price and quantity.
C) an unambiguous increase in quantity, but the effect on price is indeterminate.
D) an unambiguous increase in price, but the effect on quantity is indeterminate.

Question

Quizplus · Accepted Answer

An increase in demand and an increase in supply will lead to an increase in quantity, as both factors are pushing for more goods to be sold. However, the effect on price is indeterminate, as the increase in demand would push prices up, while the increase in supply would push prices down. The net effect on price will depend on the magnitude of the shift in demand and supply, and how they compare to each other.

An Increase in Demand and an Increase in Supply Will