[amp_mcq option1=”Increase in equilibrium price and equilibrium quantity” option2=”Decrease in equilibrium price and increase in equilibrium quantity” option3=”No change in equilibrium price and increase in equilibrium quantity” option4=”Increase in equilibrium price and no change in equilibrium quantity” correct=”option3″]<\/p>\n
The correct answer is C. No change in equilibrium price and increase in equilibrium quantity.<\/p>\n
When both supply and demand increase in equal proportion, the equilibrium price will remain unchanged, but the equilibrium quantity will increase. This is because the increase in supply will offset the increase in demand, leaving the equilibrium price unchanged. However, the increase in demand will lead to an increase in the quantity demanded, which will in turn lead to an increase in the equilibrium quantity.<\/p>\n
Here is a diagram that illustrates this concept:<\/p>\n
[Diagram of a supply and demand curve with both the supply and demand curves shifting to the right]<\/p>\n
As you can see, the increase in supply and demand shifts the equilibrium point from E1 to E2. The equilibrium price remains unchanged at P1, but the equilibrium quantity increases from Q1 to Q2.<\/p>\n
Here is a brief explanation of each option:<\/p>\n
[amp_mcq option1=”Increase in equilibrium price and equilibrium quantity” option2=”Decrease in equilibrium price and increase in equilibrium quantity” option3=”No change in equilibrium price and increase in equilibrium quantity” option4=”Increase in equilibrium price and no change in equilibrium quantity” correct=”option3″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-54873","post","type-post","status-publish","format-standard","hentry","category-economics","no-featured-image-padding"],"yoast_head":"\n