Suppose Demand Increases and Supply Increases

question 81

Multiple Choice

Suppose demand increases and supply increases. Which of the following will happen?

• A) Equilibrium price will rise, fall, or stay the same while equilibrium quantity will decrease.
• B) Equilibrium price will rise, fall, or stay the same while equilibrium quantity will increase.
• C) Equilibrium quantity will rise, fall, or stay the same and equilibrium price will increase.
• D) Equilibrium quantity will rise, fall, or stay the same while equilibrium price will decrease.
• E) The change in equilibrium price and quantity cannot be determined.

Identify the conditions under which average costs fall or rise due to marginal costs.

Recognize the reasons behind the shape of average cost curves.

Differentiate between diminishing returns to scale and decreasing returns to scale.

Understand factors leading to diminishing marginal returns.

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Definitions:

Deindividuation

A psychological state characterized by diminished self-consciousness, reduced concern for social evaluation, and weakened restraints against prohibited behaviors in groups.

Normative Social Influence

The influence of other people that leads us to conform in order to be liked and accepted by them, affecting our views, attitudes, and behaviors.

Informational Social Influence

The change in opinions or behavior that occurs when someone conforms to what they believe are the expectations of others, particularly in uncertain situations where the correct action or belief is unclear.

Social Facilitation

The tendency for people to perform differently when in the presence of others than when alone, typically improving on well-practiced tasks.