Question

Consider a simultaneous shift of both the demand curve and the supply curve.

Before the shift, the market equilibrium is at a point where the price is 6 and the quantity is 25. Also, before the shift, with each additional unit increase in price, the quantity supplied increases by 5 and the quantity demanded decreases by 5.

Now, due to a change in some government policy, the demand increases by 10 at all price levels. At the same time, the supply decreased in such a way that when the price level is 9, the quantity supplied is 30.

What is the new market equilibrium price after this simultaneous shift?

Give your answer as a whole number. Round it if necessary. You will want to draw the curves on a piece of paper to help you visualize the changes. Also remember that when the curves shift, their slopes do not change.

Answer 1