Suppose there is an increase in demand in a market and no change in the supply. What will happen to the market equilibrium price and quantity?
A) Equilibrium price will rise; equilibrium quantity will rise.
B) Equilibrium price will rise; equilibrium quantity will fall.
C) Equilibrium price will fall; equilibrium quantity will rise.
D) Equilibrium price will fall; equilibrium quantity will fall.

Question

Quizplus · Accepted Answer

An increase in demand without a change in supply will lead to a shortage in the market. This means that consumers will be willing to pay a higher price to purchase the limited quantity available, causing the equilibrium price to rise. However, the increase in demand also means that producers will want to produce more to take advantage of the higher prices. As a result, the equilibrium quantity will also rise.

Suppose There Is an Increase in Demand in a Market