Question

How would you need to shift the supply and demand curves in a market to result in a situation where equilibrium quantity increases while the equilibrium price change is indeterminate?

Supply must increase while demand decreases.

Either supply or demand must increase.

Both supply and demand must increase.

Answer 1

Both supply and demand must increase.

An increase in supply while demand decreases would cause a drop in price while quantity may or may not change.

An increase in only demand would raise price and quantity, while an increase in only supply would raise quantity and reduce price.

An increase in both demand and supply by an equal amount would cause quantity to increase and price to remain the same. This can be illustrated by the figure below;

​​​​​​​