Question

Suppose there is a simultaneous increase in the demand for rice and increase in the supply of rice. Which of the following will occur as a result of these simultaneous events?
A) The market clearing price will fall, but the quilibrium quantity will rise.
B) Both the market clearing price and equilibrium quantity will rise.
C) The market learing price may rise, fall, or stay the same, but the equilibrium quantity will rise.
D) The market clearing price will all, but the equilibrium quantity may rise, fall, or stay the same.

Answer 1

Answer:

C) The market learing price may rise, fall, or stay the same, but the equilibrium quantity will rise. 

Explanation:

An increase in demand would lead to an increase in demand and price.

An increase in supply would lead to an increase in supply and a fall in price.

The combined effect would lead to an increase in equilibrium quantity but the effect on equilibrium price would be indeterminate.

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