Question

Which of the following statements is true?

Options

• When demand increases more than supply, the equilibrium price will increase.

• When demand increases more than supply, the equilibrium price will decrease.

• When supply increases more than demand, the equilibrium price will increase. 

• When demand decreases more than supply, equilibrium price will increase.

Answer 1

When demand increases more than supply, the equilibrium price will increase.

Explanation:

An increase in demand raises the equilibrium price, while a decrease in demand lowers it. Furthermore, when demand rises, the equilibrium quantity rises, and when demand falls, the equilibrium quantity falls.