Question

"If the demand and supply of a commodity both increase, the equilibrium price may not change, may increase, may decrease."

Answer 1

There are 3 cases for increase in demand and supply.

1) when increase in demand and supply is equal the equilibrium quantity will increase but there will be no change in equilibrium price.

2) When increase in demand is more than increase in supply there is an increase in equilibrium price as well as quantity but increase in quantity is more than increase in equilibrium price.

3) When increase in demand is less than increase in supply there is an increase in equilibrium price and equilibrium quantity.