Assume the beef market is in equilibrium and then the demand for beef increases and the supply of beef decreases simultaneously. What happens to equilibrium price and quantity of beef? Select one: a. P increase, Q unknown b. P unknown, Q increases c. P decreases, Q unknown d. P unknown, Q decreases a. P unknown, Q decreases
In this question, the market for beef is in equilibrium. Later on two events happened simultaneously. They are
a. Demand for beef increases. It means the demand curve for beef shits right hand side.
b. Supply of beef decreases. It means the supply curve for beef shifts left hand side.
The demand and supply in this case are moving in the opposite direction. However, the percentage change in both the demand and supply is not given. In this condition where the demand and supply is moving in opposite direction and where there is a increase in demand and decrease in supply, the PRICE can be determined but the QUANTITY cannot be determined. The effect on the output can be determined if the percentage changes in the price and output is given.
In the above situation the price will increase because the demand is increased and supply is decreased. What happens to output cannot be determined.
Answer - a. P increase, Q unknown
Assume the beef market is in equilibrium and then the demand for beef increases and the...