Final answer:
An increase in both equilibrium price and quantity exchange indicates a situation where demand has increased and supply has increased but not to the same extent. Supply shortages can cause these outcomes. The correct option is c.
Step-by-step explanation:
An increase in both equilibrium price and quantity exchange is typically consistent with a scenario where the supply fails to meet an increase in demand. This situation does not correspond to elastic or inelastic demand alone, but rather to the interactions between demand and supply in the market.
If demand increases and supply also increases but not as much, we may see both the equilibrium price and quantity exchanged increase. This could happen due to input scarcity or rising wages that make it difficult for suppliers to increase production.
If the supply increases more easily in response to demand, like due to new technology or economies of scale, then the equilibrium price might decline instead.
Thus, in an actual market situation, whether we see both price and quantity increase depends on how much the supply curve can shift to meet new demand and the elasticity of the demand curve. The correct option is c.