If supply and demand both simultaneously increase
A) the market clearing price definitely rises, and the equilibrium quantity definitely falls.
B) the market clearing price definitely rises, and the effect on the equilibrium quantity is indeterminate.
C) the market clearing price definitely falls, and the effect on the equilibrium quantity is indeterminate.
D) the effect on the market clearing price is indeterminate, and the equilibrium quantity definitely rises.

Question

Quizplus · Accepted Answer

When both supply and demand increase simultaneously, the effect on the market clearing price is uncertain because it depends on the relative magnitudes of the shifts in supply and demand. However, the equilibrium quantity will definitely increase as both curves shift to the right.

If Supply and Demand Both Simultaneously Increase