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) $P$ increased
$Q$ unknown
(B) $P$ decreased
$Q$ unknown
(c) $P$ increased
$Q$ stays the same

D $P$ increased
$Q$ increased
(E) $Q$ increased
$P$ stays the same

Question

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) $P$ increased
$Q$ unknown
(B) $P$ decreased
$Q$ unknown
(c) $P$ increased
$Q$ stays the same

D $P$ increased
$Q$ increased
(E) $Q$ increased
$P$ stays the same

Accepted Answer

∻Solution∻ ‖ a ⋮ Graph Analysis: The graph shows shifts in both the supply curve (from S1 to S2) and the demand curve (from D1 to D2). The new equilibrium point is at a higher price level compared to the initial equilibrium point. ‖ ‖ b ⋮ Price Determination: Since both the supply and demand curves have shifted, the new equilibrium price is definitely higher than the initial equilibrium price. ‖ ‖ c ⋮ Quantity Ambiguity: The new equilibrium quantity is ambiguous because the intersection of S2 and D2 is roughly at the same quantity point as the intersection of S1 and D1. ‖ ∻Answer∻ ⚹ (A) $P$ increased, $Q$ unknown ⚹ ∻Key Concept∻ ⚹ Equilibrium Price and Quantity ⚹ ∻Explanation∻ ⚹ When both supply and demand curves shift, the new equilibrium price can be determined if both shifts lead to a higher price. However, the new equilibrium quantity can be ambiguous if the shifts do not clearly indicate a change in quantity. ⚹◊What factors could have caused the shifts in both the supply and demand curves in the market for music lessons?⍭ Generate me a similar question◊

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