Question 17
Price DeterminationWhich of the following changes in equilibrium price and quantity is as a result of an upward shift in the market demand for a commodity?
- A.Both the price and the quantity fall
- B.The price rises and the quantity falls
- C.The price falls and the quantity rises
- D.Both the price and the quantity rise.
Show the answer and explanation
Answer: D (Both the price and the quantity rise.)
Explanation
An increase in demand with an upward-sloping supply curve raises both the equilibrium price and quantity.