If Supply and Demand Both Shift to the Right, Equilibrium

question 112

Multiple Choice

If supply and demand both shift to the right, equilibrium quantity:

• A) rises, but the equilibrium price may rise, fall, or stay the same.
• B) falls, but the equilibrium price may rise, fall, or stay the same.
• C) may rise, fall, or stay the same, but equilibrium price will rise.
• D) may rise, fall, or stay the same, but equilibrium price will fall.

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Definitions:

Operating Income

Earnings before interest and taxes (EBIT), measuring a company's profit from its operational and regular business activities.

Fixed Costs

Expenses that do not change in relation to the volume of production or sales, such as rent, salaries, and insurance.

Operating Leverage

A measure of the relative mix of a business’s variable costs and fixed costs, computed as contribution margin divided by operating income.

Highly Automated Industries

Sectors where machines and advanced technologies preponderantly perform production and operational processes, reducing human intervention.