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Suppose the market for a good is initially in equilibrium. For a given upward-sloping supply curve, all other things remaining unchanged, an increase in demand will typically _____
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Suppose the market for a good is initially in equilibrium. For a given upward-sloping supply curve, all other things remaining unchanged, an increase in demand will typically _____

User Fernando Mazzon
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17 votes

Answer: a. increase the equilibrium price but the change the equilibrium quantity in either direction.

Step-by-step explanation:

When there is an increase in demand, it will cause the demand curve to shift to the right. This leads to it intersecting with the supply curve at a higher point where prices will be higher as shown by the graph.

As a result, the equilibrium quantity will also rise which means that supply will increase to cater for the new demand but will do so at a higher price to cater for scarcity.

Suppose the market for a good is initially in equilibrium. For a given upward-sloping-example-1
User Usinuniverse
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