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Question
Macroeconomics
Posted 8 months ago

The market for music lessons has experienced a change in supply and a change in demand as shown here.
The market for music lessons

What will definitely happen to the price and quantity of music lessons?
Choose 1 answer:
(A) PP increased QQ unknown
(B) PP decreased QQ unknown
(c) PP increased QQ stays the same
(D) PP increased QQ increased
(E) QQ increased PP stays the same
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Answer from Sia
Posted 8 months ago
Solution
a
Graph Analysis: The graph shows two supply curves (S1 and S2) and two demand curves (D1 and D2). The initial equilibrium is at the intersection of S1 and D1, and the new equilibrium is at the intersection of S2 and D2
b
Supply and Demand Shifts: The shift from S1 to S2 indicates an increase in supply, and the shift from D1 to D2 indicates an increase in demand
c
Equilibrium Changes: An increase in both supply and demand typically leads to an increase in quantity (Q). The effect on price (P) depends on the relative magnitudes of the shifts
d
Conclusion: Given that both supply and demand have increased, the most likely outcome is that both the price and quantity of music lessons will increase
Answer
(D) PP increased QQ increased
Key Concept
Equilibrium Shift
Explanation
When both supply and demand increase, the equilibrium quantity will definitely increase. The price will also increase if the demand shift is relatively larger than the supply shift.

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