Suppose both the demand for and supply of salsa increase (although not necessarily by the same amount).What can we conclude about changes in the price and quantity of salsa?
A)Both the price and quantity increase.
B)The price increases but the change in the quantity cannot be determined.
C)The quantity increases but the change in the price cannot be determined.
D)Both the price and quantity decrease.

Question

Quizplus · Accepted Answer

When both demand and supply increase, the quantity of salsa sold is guaranteed to increase because both curves shift to the right. However, the effect on price is ambiguous without knowing the relative magnitudes of the shifts in demand and supply.

Suppose Both the Demand for and Supply of Salsa Increase