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An increase in equilibrium will result from each of the following EXCEPT?
A. an increase in both supply and demand
B. an increase in demand and no change in supply
C. an increase in supply and no change in demand
D. a decrease in both supply and demand
Ok this is the one question I'm having difficulty with because it's so wordy for me. Any help would be much appreciated! Please and thank you!
3 Answers
- 8 years agoFavorite Answer
The answer is D.
When you're truly having difficulty with a single problem that you can't understand conceptually, draw out the graphs.
D. is the only one that results in a DECREASE in the equilibrium.
The supply curve shifts to the left, and so does the demand curve.
D gives you a graph that has a decreased quantity and thus decreased equilibrium.
All the other graphs, if drawn out, would move to the right = increase equilibrium.
:)
- Anonymous8 years ago
C.
[ Situation A can increase equilibrium price if the change in demand is greater than supply
Situation in B will most definitely increase price . Increased competition from buyers will see to that.
Situation D can increase equilibrium price if the fall in supply is greater than the fall in demand.
Situation C is the odd one out because an increase in supply relative to demand will mean that supplier have produced too much and they will be forced to compete for existing demand by lowering price. ]
