A simultaneous increase in both the supply of and the demand for vitamin water would cause an increase in the equilibrium quantity of vitamin water. Is it true or false?
Understand the Problem
This question explores the effects of simultaneous shifts in supply and demand on equilibrium quantity. We need to analyze how an increase in both supply and demand impacts the market equilibrium to determine if the statement is true or false.
Answer
True
The statement is true. A simultaneous increase in both supply and demand will always increase the equilibrium quantity.
Answer for screen readers
The statement is true. A simultaneous increase in both supply and demand will always increase the equilibrium quantity.
More Information
When both supply and demand increase, the equilibrium quantity will increase. The change in equilibrium price is indeterminate without knowing the magnitude of the shifts.
Tips
The equilibrium price is indeterminate because it relies on the magnitude of the shifts in supply and demand. If demand increases more than supply, the equilibrium price will increase. If supply increases more than demand, the equilibrium price will decrease. If they increase by the same amount, the equilibrium price will stay the same.
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