“If demand increases and supply decreases, then both the equilibrium price and quantity will increase.” What conditions are necessary to make this statement true?
Please provide the best answer for the statement.
For a demand increase and a supply decrease to result in an increase in both price and quantity, the shift in demand must be greater than the shift in supply. When demand increases this increases both the price and quantity demanded of a good. The decrease in supply further raises the price but causes a decrease in quantity supplied. Quantity can only increase if the increase caused by the shift in demand outweighs the decrease caused by the shift in supply.
You might also like to view...
According to this Application, cell phones were introduced to the public in 1983, but it took the Bureau of Labor Statistics ________ to include them in calculating the CPI
A) 3 years B) 7 years C) 15 years D) 24 years
An increase in demand, all other things unchanged, will result in ________ in equilibrium price and ________ in equilibrium quantity.
Fill in the blank(s) with the appropriate word(s).
At the point where actual inflation is equal to expected inflation,
A) the short-run Phillips curve intersects the long-run Phillips curve. B) the short-run Phillips curve is the same as the long-run Phillips curve. C) the unemployment rate is zero. D) there is no short-run Phillips curve, as this situation only occurs in the long run.
Double taxation of corporate earnings
A. tends to restrict the activities of corporate firms. B. causes stockholders to earn a lower return than they would on other securities of comparable risk. C. results in more investment in research and development. D. All of these responses are correct.