Brilliant Industries
Quantitative Finance
Level
3
Brilliant Industries produces a consumer good called problems . Suppose both the supply and demand for problems increase. What must happen to the equilibrium point for the market in problems as a result?
The quantity will decrease
Two or more of these choices will occur
The price will decreases
The price will increase
None of these choices will occur
The quantity will increase
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1 solution
When the supply and demand both increase, their curves both shift to the right. Thus, the quantity of the equilibrium must increase. However, we cannot say for certain whether the price will increase or decrease. Depending on the magnitude of the increase in supply and the increase in demand, the price at the equilibrium point can increase, decrease, or even stay the same. The only thing we can say for certain is that the quantity will increase .