Question

If the demand curve increases while the supply curve is held constant, what will be the result in terms of the new equilibrium price and quantity?

MCQ Options:
a. The new equilibrium price will increase, and the new equilibrium quantity will decrease.
b. The new equilibrium price will decrease, and the new equilibrium quantity will increase.
c. Both the new equilibrium price and quantity will increase.
d. Both the new equilibrium price and quantity will decrease.

Answer 1

c. Both the new equilibrium price and quantity will increase.

If the demand curve increases and the supply curve remains constant, both the new equilibrium price and quantity will increase.

Step-by-step explanation:

When the demand curve increases, while the supply curve remains constant, this is represented on a graph as a rightward shift of the demand curve. Since the supply curve does not move, the new equilibrium point will be at a higher quantity and price than before. Therefore, the result of an increase in demand while supply remains constant will be both a higher equilibrium price and a higher equilibrium quantity.