Which of the following definitely results in a product’s equilibrium price rising? A. an increase in both demand and supply B. a decrease in both demand and supply C. an increase in demand combined with a decrease in supply D. a decrease in demand combined with an increase in supply E. an increase in the supply combined with no change in the demand

Answer:

Equilibrium Price

Equilibrium price is the point at which the quantity of a good that a buyer is willing and able to buy is equal to the quantity of a good that a seller is willing and able to sell. A change in the equilibrium price of a product occurs when either the demand or the supply changes.

Increase in Both Demand and Supply

When both demand and supply of a product increase at the same time, the overall effect on the equilibrium price is an increase. This is because an increase in demand increases the quantity of the product that buyers are willing to buy, which can lead to an increase in the price of the product. At the same time, an increase in supply will increase the quantity of the product that sellers are willing to sell, which can also lead to an increase in the price of the product. As a result, the equilibrium price for the product will rise.

Decrease in Both Demand and Supply

When both demand and supply of a product decrease at the same time, the overall effect on the equilibrium price is a decrease. This is because a decrease in demand decreases the quantity of the product that buyers are willing to buy, which can lead to a decrease in the price of the product. At the same time, a decrease in supply will decrease the quantity of the product that sellers are willing to sell, which can also lead to a decrease in the price of the product. As a result, the equilibrium price for the product will fall.

Increase in Demand Combined with a Decrease in Supply

When demand for a product increases while supply decreases, the overall effect on the equilibrium price is an increase. This is because an increase in demand increases the quantity of the product that buyers are willing to buy, which can lead to an increase in the price of the product. At the same time, a decrease in supply will decrease the quantity of the product that sellers are willing to sell, which can also lead to an increase in the price of the product. As a result, the equilibrium price for the product will rise.

Decrease in Demand Combined with an Increase in Supply

When demand for a product decreases while supply increases, the overall effect on the equilibrium price is a decrease. This is because a decrease in demand decreases the quantity of the product that buyers are willing to buy, which can lead to a decrease in the price of the product. At the same time, an increase in supply will increase the quantity of the product that sellers are willing to sell, which can also lead to a decrease in the price of the product. As a result, the equilibrium price for the product will fall.

Increase in Supply Combined with No Change in Demand

When the supply of a product increases while the demand remains the same, the overall effect on the equilibrium price is a decrease. This is because an increase in supply will increase the quantity of the product that sellers are willing to sell, which can lead to a decrease in the price of the product. As a result, the equilibrium price for the product will fall.

Related Questions

• What is the difference between equilibrium price and market price?
• What happens to equilibrium price when demand increases?
• What happens to equilibrium price when supply decreases?
• What happens to equilibrium price when demand and supply both increase?
• What happens to equilibrium price when demand and supply both decrease?
• What happens when there is an increase in demand and a decrease in supply?
• What happens when there is a decrease in demand and an increase in supply?
• What happens when there is an increase in supply and no change in demand?
• What happens to market price when demand increases?
• What happens to market price when supply decreases?