Multiple choice

In perfect competition, if the increase in demand is equal to increase in supply, the new equilibrium price will

  1. increase

  2. decrease

  3. either increase or decrease

  4. not change

Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The equilibrium price will not change if there is equal increase in demand and supply. If demand increases more than supply then equilibrium price will increase and vice versa.