Suppose There Is a Simultaneous Increase in Demand and Increase

question 366

Multiple Choice

Suppose there is a simultaneous increase in demand and increase in supply. Given this information, we know with certainty that

• A) both the equilibrium price and the equilibrium quantity will increase.
• B) the equilibrium price will increase, and the equilibrium quantity will increase.
• C) the equilibrium quantity will increase.
• D) the equilibrium price will increase.

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Definitions:

Marginal Revenue

The extra revenue gained by the sale of an additional unit of a product or service.

Total Revenue

The total amount of income generated by the sale of goods or services by a company.

Average Cost

The total cost of production divided by the quantity of output produced, representing the cost per unit of output.

Marginal Cost

The rise in overall expenses incurred from manufacturing an extra unit of a good or service.