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Question
Microeconomics
Posted 2 months ago

In which of the following scenarios would we definitely know that price will increase but we'd be unable to determine how quantity changes?

Choose 1 answer:
(A) DD \downarrow and SS \uparrow
(B) DD \uparrow and SS no change
(c) DD \downarrow and SS \downarrow
(D) DD \uparrow and SS \uparrow
(E) DD \uparrow and SS \downarrow
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Answer from Sia
Posted 2 months ago
Solution
a
Demand Increase and Supply Increase: When both demand (DD) and supply (SS) increase, the price will definitely increase because the increase in demand puts upward pressure on the price. However, the change in quantity is uncertain because it depends on the relative magnitudes of the shifts in demand and supply
Answer
(D) DD \uparrow and SS \uparrow
Key Concept
Simultaneous Increase in Demand and Supply
Explanation
When both demand and supply increase, the price will definitely increase due to the higher demand. However, the change in quantity is uncertain because it depends on the relative magnitudes of the shifts in demand and supply.

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