Homework SourseAn increase in demand causes an increase in the equilibrium
An increase in demand causes an increase in the equilibrium price. The increase in equilibrium price will then cause an increase in supply.
True or false
An increase in demand causes an increase in the equilibrium price. The increase in equilibrium price will then cause an increase in supply.
True or false
True or false
Solution
false.
First part is ture. An increase in demand causes an increase in the equilibrium price.
But, equilibrium price is inversely proportional to supply. Supply increases and equilibrium price decreases.
