Question

When both the demand and supply curves shift to indicate increase in demand and supply in the same proportion___________.

• A. only equilibrium price changes
• B. only equilibrium quantity remains unchanged
• C. equilibrium price remains unchanged but equilibrium quantity decreases.
• D. equilibrium price remains unchanged but equilibrium quantity increases.

Answer 1

The correct option is D equilibrium price remains unchanged but equilibrium quantity increases.

As both the shift in demand curve from DD to D1D1 is equal to the shift in supply curve of SS to S1S1. As the increase in demand and supply takes place there is an increase in quantity from OQ to OQ1 but there is no change in the equilibrium price, it remains unchanged.