|Author||Topic: Question on reading 14 practice Q4|
|for the question 4, if the elasticity of both demand and supply increase, the total surplus will decrease. I understand that both of the demand and supply curves will be more horizontal, to have the area of total surplus decrease, only when the equilibrium quantity remains unchanged. BUT, how can it imply the equilibrium quantity remains the same? for elastic demand and supply, quantity change should be more than price change, will not the equilibrium quantity shift much to the right to generate a triangle with larger area?|
|Price is never a determinate for the shift of demand or suply curves. Price can move the points along the curve. For example technological advanse can move supply curve to the right!|
CFA Discussion Topic: Question on reading 14 practice Q4
I passed! I did not get a chance to tell you before the exam - but your site was excellent. I will definitely take it next year for Level II.