Suppose there is an increase in both the supply and demand for personal computers. In the market for personal computers, we would expect?
Correct answer: E. the equilibrium quantity to rise and the change in the equilibrium price to be ambiguous.
- A. the equilibrium quantity to rise and the equilibrium price to rise
- B. the equilibrium quantity to rise and the equilibrium price to fall
- C. the equilibrium quantity to rise and the equilibrium price to remain constant
- D. the change in the equilibrium quantity to be ambiguous and the equilibrium price to rise
- E. the equilibrium quantity to rise and the change in the equilibrium price to be ambiguous.
Explanation
An increase in both demand and supply raises the equilibrium quantity because both shifts push quantity upward. Their effects on price oppose each other, so the equilibrium price is ambiguous.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? [email protected]
About Microeconomics
Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
Practise Microeconomics
1,742 free Microeconomics MCQs from Economics, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Discussion
Stuck on an option, or know a faster way to get there? Ask or explain it here.
No comments yet. Be the first to explain this one.
Exams that ask Economics questions like this
Economics is on 3 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Microeconomics questions
Which of the following statements is true about the impact of an increase in the price of lettuce ?
Suppose consumer tastes shift toward the consumption of apples Which of the following statements is an accurate description of the impact of this event on the market for apples ?
An inferior good is one for which an increase in income causes a(n) ?
If the price of good is below the equilibrium price ?
All of the following shift the supply of watches to the right except ?
A monopolistic market has ?