An increase in the equilibrium price and the equilibrium quantity would be caused by an increase in demand.

Question

Quizplus · Accepted Answer

An increase in demand causes an increase in both equilibrium price and equilibrium quantity according to the law of demand and supply. When demand increases, there is a shortage of the product leading to an increase in price. This increase in price, in turn, provides an incentive for suppliers to produce more resulting in an increase in the equilibrium quantity.

An Increase in the Equilibrium Price and the Equilibrium Quantity