Which of the Following Always Results in an Increase in Equilibrium

question 201

Multiple Choice

Which of the following always results in an increase in equilibrium price and quantity?

• A) an increase in supply and a decrease in demand
• B) an increase in demand with no change in supply
• C) an increase in supply with no change in demand
• D) all of the above

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Definitions:

Marginal External Cost

The cost of producing one additional unit of a good or service that is borne by people other than the producer, often not reflected in the product's market price.

Socially Optimal

A state or outcome in which resource allocation maximizes social welfare, considering all costs and benefits to society.

Market Price

The current price at which an asset or service can be bought or sold, determined by supply and demand.

Emissions Standard

Legal limit on the amount of pollutants that a firm can emit.