If demand and supply both increase, the:

Question

Quizplus · Accepted Answer

If both demand and supply increase, it means that buyers want to purchase more goods and sellers are willing to produce more goods. This leads to an increase in both quantity produced and sold. However, the effect on equilibrium price is ambiguous. If the increase in supply is larger than the increase in demand, the equilibrium price will decrease. If the increase in demand is larger than the increase in supply, the equilibrium price will increase. If the increase in demand and supply is proportional, the equilibrium price will remain constant. Therefore, the best choice is B, which states that the quantity produced and sold will increase while the equilibrium price could increase, decrease, or remain constant.

If Demand and Supply Both Increase, The