Suppose there is an increase in the both the supply and demand for personal computers Further, suppose the supply of personal computer increase more than demand for personal computers In the market for personal computers i the market for personal computers, we would expect ?
Correct answer: D. the equilibrium quantity to rise and the equilibrium price to fall
- A. the change in the equilibrium quantity to be ambiguous and the equilibrium price to fall.
- B. the equilibrium quantity to rise and the equilibrium price to rise
- C. the equilibrium quantity to rise and the change in the equilibrium price to be ambiguous
- D. the equilibrium quantity to rise and the equilibrium price to fall
- E. the equilibrium quantity to rise and the equilibrium price to remain constant
Explanation
An increase in both supply and demand raises equilibrium quantity because both shifts push quantity upward. Since supply increases more than demand, the supply-side downward pressure on price dominates and equilibrium price falls.
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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.
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