Question

Match each of the following to its results:

a. An increase in both demand and supply.
b. An increase in demand.
c. A decrease in demand.
d. An increase in supply.

1. A decrease in equilibrium price but an increase in equilibrium quantity.
2. An increase in equilibrium quantity.
3. An increase in both equilibrium price and equilibrium quantity.
4. A decrease in both equilibrium price and equilibrium quantity.

Answer 1

An increase in both demand and supply leads to a higher equilibrium quantity, possibly without a significant price change. An increase in demand raises the equilibrium price and quantity, while a decrease in demand lowers both. An increase in supply alone decreases the equilibrium price but increases the quantity.

Step-by-step explanation:

Understanding the effects of supply and demand changes on equilibrium price and quantity is vital in Economics. When supply and demand change, they shift the supply and demand curves, affecting the market equilibrium.

• a. An increase in both demand and supply results in a higher equilibrium quantity, but the equilibrium price may not change significantly if the increases are proportional (Match with 2).
• b. An increase in demand alone will lead to an increase in both equilibrium price and quantity (Match with 3).
• c. A decrease in demand leads to a lower equilibrium price and quantity (Match with 4).
• d. An increase in supply, if not matched by an increase in demand, will result in a lower equilibrium price but a higher equilibrium quantity (Match with 1).

Correct options:- (a) matches with 2, (b) with 3, (c) with 4, and (d) with 1. These matchings are based on standard shifts in supply and demand affecting the equilibrium in a product or labor market.