An increase in demand while supply remains unchanged causes equilibrium price and quantity to ________.

decrease

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increase

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rise initially and then fall

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none of the above

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Solution

The correct option is A increase
An increase in demand while the supply remains unchanged causes equilibrium price and quantity to increase. Due to increase in demand the quantity demanded will increase this will thereby increase competition in the market which will leaf to increase in price of the product. hence, when the price increases demand decreases to reach to equilibrium and new equilibrium quantity and price will be derived.

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Similar questions

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