If both the demand curve and the supply curve shift to the right, we can unambiguously conclude that the
A) market clearing price will increase.
B) market clearing price will decrease.
C) equilibrium quantity will increase.
D) equilibrium quantity will decrease.

Question

Quizplus · Accepted Answer

When both the demand curve and the supply curve shift to the right, it indicates an increase in both demand and supply, leading to a higher equilibrium quantity and an ambiguous change in market-clearing price. However, since the shift in demand is more substantial than the shift in supply, there will be a higher likelihood that the equilibrium quantity will increase, making C the most appropriate choice.

If Both the Demand Curve and the Supply Curve Shift