What happens to the price and quantity of dog treats if the demand for dog treats increases and the supply of dog treats increases?

Choose 1 answer:
(A) Price decreases; quantity demanded doesn't change.
(B) We do not know what happens to price; quantity increases.
- INCORRECT (SELECTED)
Price decreases; quantity increases.
Price decreases and quantity increases if supply increases, not when demand increases. A change in demand leads to the same change in price and quantity, but a change in supply leads to the same change in quantity and an opposite change in price.
(D) Price decreases; quantity decreases.
(E) Price increases; quantity decreases.

Question

What happens to the price and quantity of dog treats if the demand for dog treats increases and the supply of dog treats increases?

Choose 1 answer:
(A) Price decreases; quantity demanded doesn't change.
(B) We do not know what happens to price; quantity increases.
- INCORRECT (SELECTED)
Price decreases; quantity increases.
Price decreases and quantity increases if supply increases, not when demand increases. A change in demand leads to the same change in price and quantity, but a change in supply leads to the same change in quantity and an opposite change in price.
(D) Price decreases; quantity decreases.
(E) Price increases; quantity decreases.

Accepted Answer

∻Solution∻ ‖ a ⋮ Demand and Supply Increase: When both demand and supply increase, the quantity will definitely increase. However, the effect on price is uncertain because it depends on the relative magnitudes of the shifts in demand and supply. ‖ ‖ b ⋮ Price Uncertainty: If the increase in demand is greater than the increase in supply, the price will rise. Conversely, if the increase in supply is greater than the increase in demand, the price will fall. If the increases are equal, the price will remain unchanged. ‖ ∻Answer∻ ⚹ (B) We do not know what happens to price; quantity increases. ⚹ ∻Key Concept∻ ⚹ Simultaneous shifts in demand and supply ⚹ ∻Explanation∻ ⚹ When both demand and supply increase, the quantity will always increase, but the effect on price is indeterminate without knowing the relative magnitudes of the shifts. ⚹◊What would be the impact on the equilibrium price and quantity of dog treats if both demand and supply increase simultaneously in the market?⍭ Generate me a similar question◊

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