QuestionJuly 15, 2025

Create a scenario in which either supply or demand would shift out of equillibrium , then explain how the market price and quantity are affected by this shift.

Create a scenario in which either supply or demand would shift out of equillibrium , then explain how the market price and quantity are affected by this shift.
Create a scenario in which either supply or demand would shift out of equillibrium , then explain how the market price and quantity are affected by this shift.

Solution
4.7(349 votes)

Answer

The market price and quantity of electric cars both increase. Explanation 1. Define the Scenario Assume a scenario where there is an increase in consumer income, leading to a higher demand for electric cars. 2. Identify Demand Shift The increase in consumer income causes the demand curve for electric cars to shift to the right. 3. Analyze Market Effects **Law of Demand and Supply**: When demand increases, with supply constant, the equilibrium price and quantity both rise. 4. Determine New Equilibrium The new intersection of the demand and supply curves results in a higher market price and greater quantity sold.

Explanation

1. Define the Scenario<br /> Assume a scenario where there is an increase in consumer income, leading to a higher demand for electric cars.<br /><br />2. Identify Demand Shift<br /> The increase in consumer income causes the demand curve for electric cars to shift to the right.<br /><br />3. Analyze Market Effects<br /> **Law of Demand and Supply**: When demand increases, with supply constant, the equilibrium price and quantity both rise.<br /><br />4. Determine New Equilibrium<br /> The new intersection of the demand and supply curves results in a higher market price and greater quantity sold.
Click to rate:

Similar Questions