Sia
Question
Statistics
Posted 8 months ago
The market for music lessons has experienced a change in supply and a change in demand as shown here.
The market for music lessons
What will definitely happen to the price and quantity of music lessons?
Choose 1 answer:
(A) increased
unknown
(B) decreased
unknown
(C) increased
stays the same
(D) increased
increased
(E) increased
stays the same
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Answer from Sia
Posted 8 months ago
Solution by Steps
step 1
To analyze the impact on price and quantity of music lessons, we look at the shifts in supply and demand curves
step 2
The supply curve shifts from to , which indicates an increase in supply
step 3
The demand curve shifts from to , which indicates an increase in demand
step 4
An increase in supply would tend to decrease price and increase quantity, while an increase in demand would tend to increase both price and quantity
step 5
Since both supply and demand have increased, the effect on price is ambiguous without more information, but the quantity of music lessons will definitely increase
Answer
E
Key Concept
Simultaneous shifts in supply and demand
Explanation
When both supply and demand increase, the quantity traded in the market will definitely increase, but the effect on price is indeterminate without knowing the relative magnitudes of the shifts.
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