When Demand Increases, the Equilibrium Price and the Equilibrium Quantity

question 419

Multiple Choice

When demand increases, the equilibrium price and the equilibrium quantity .

• A) rises; increases
• B) falls; decreases
• C) falls; increases
• D) rises; decreases

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Definitions:

Excess Demand

A situation in which the quantity demanded of a good or service exceeds the quantity supplied at a given price.

Queuing

The process of forming or waiting in a line, often applied to the theory studying the behavior of lines to improve service efficiency.

Rationing Mechanism

A system or method used to distribute scarce goods or services among competing users.

Price Floor

A government- or authority-imposed minimum price that can be charged for goods and services, typically above the equilibrium price, to prevent prices from falling too low.