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Examveda

When equilibrium price rises but equilibrium quantity remains unchanged, the cause is

A. Supply and demand both increase equally

B. Supply and demand both decrease equally

C. Supply decreases and demand increases

D. Supply increases and demand decreases

Answer: Option C

Solution(By Examveda Team)

When equilibrium price rises but equilibrium quantity remains unchanged, the cause is supply decreases and demand increases. As price increases, it serves as an incentive for suppliers to increase supply and also leads to a fall in demand. It is important to realize that these processes continue to operate until a new equilibrium is established.

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Comments ( 1 )

  1. Wani
    Wani :
    11 months ago

    As the price increases, supply should increase and demand should decrease...
    I can not get the answer of this question..
    Can any body explain?

Related Questions on Economics

Which among the following statement is INCORRECT?

A. On a linear demand curve, all the five forms of elasticity can be depicted

B. If two demand curves are linear and intersecting each other, then, coefficient of elasticity would be same on different demand curves at the point of intersection.

C. If two demand curves are linear and parallel to each other, then, at a particular price, the coefficient of elasticity would be different on different demand curves.

D. The price elasticity of demand is expressed in terms of relaive not absolute changes in Price and Quantity demanded.