Suppose There Is an Increase in Both the Supply and Demand

question 36

Multiple Choice

Suppose there is an increase in both the supply and demand for personal computers. In the market for personal computers, we would expect

• 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.

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Definitions:

Consumer Surplus

The difference between what consumers are willing to pay for a good or service and what they actually pay, representing their gained benefit.

Market Price

The current price at which a commodity, security, or service can be bought or sold in a particular market.

Willingness to Pay

The maximum amount an individual is prepared to spend for a particular good or service.

Consumer Surplus

The gap between the aggregate amount that buyers are willing and able to allocate for a good or service and the total sum they really pay.