Question

An increase in supply and an increase in demand for some goods causes quantity to decrease....

An increase in supply and an increase in demand for some goods causes quantity to decrease.

True or False

Homework Answers

Answer #1

False.

  • An increase in supply and an increase in demand for some goods will cause equilibrium quantity to rise.
  • This is because when consumer's consumption increases, they demand more of a good and the firms are ready to supply more which increases the quantity of output produced and supplied.
  • When supply and demand move in the same direction, the quantity of output produced and sold change's but the effect on price cannot be determined easily.
  • Hence, When both supply and demand increases, the quantity increases.
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