Suppose there is a simultaneous increase in demand and increase in supply. Given this information, we know with certainty that
A) both the equilibrium price and the equilibrium quantity will increase.
B) the equilibrium price will increase, and the equilibrium quantity will increase.
C) the equilibrium quantity will increase.
D) the equilibrium price will increase.

Question

Quizplus · Accepted Answer

When there is a simultaneous increase in demand and supply, the equilibrium quantity will definitely increase because both forces push the quantity in the same direction. However, the effect on price is uncertain without knowing the relative magnitudes of the shifts in demand and supply.

Suppose There Is a Simultaneous Increase in Demand and Increase