CFA Practice Question
If there is an increase in both the supply and demand for a good, then which of the following will necessarily occur?
A. The price of the good will fall.
B. The quantity produced and exchanged will increase.
C. The price of the good will increase.
Explanation: Since both supply and demand have increased, the intersection of demand and supply will imply a higher level of output. The effect on price is indeterminate.
User Contributed Comments 3
| User | Comment |
|---|---|
| farhan92 | Your selection -Not Selected The moment you answer a question correctly in your head! |
| pigletin | Maybe it's the slope that decides whether the price fall or rise |
| agogoi | Both supply and demand curves shift to the right. Hence, the intersection point shifts right leading to higher quantity. |