We Cannot Predict the Effect on the Equilibrium Quantity, but Know

question 105

Multiple Choice

We cannot predict the effect on the equilibrium quantity, but know that the market clearing price will increase when

• A) supply decreases and at the same time demand increases.
• B) supply increases and demand increases simultaneously.
• C) supply and demand decreases simultaneously.
• D) supply and demand increases simultaneously.

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Definitions:

Maximizing Profits

The process of adjusting production or operations to achieve the highest possible profitability from the business activities.

Perfectly Competitive Firms

Companies operating in a market where no individual firm has the power to influence market prices or product quality, ensuring no barriers to entry or exit.

Demand Curves

Graphs showing the relationship between the price of a good and the quantity of the good that consumers are willing and able to purchase at various prices.

Influence Over Price

The ability of a seller or a buyer to affect the price of goods or services in the market.