Question

What can be the effects on the equilibrium price of a commodity when its demand and supply curves both shift to the right simultaneously?

Answer 1

When both demand and supply shift towards the right there is an increase in demand as well as supply.

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.