Consider the pizza market shown in the graph at right An inc

Consider the pizza market shown in the graph at right. An increase in the demand for pizza will the equilibrium price andthe equilibrium quantity Pizza Market O A. increase, increase O B. decrease, increase O C. increase, maintair O D. decrease, decrease Quantity of Pizza

Solution

Answer is A. Increase; Increase.

Explanation:

The increase in demand will lead to shift of demand curve to the right resulting in new equilibrium point. At new equilibrium point, the equilibrium price and equilibrium quantity both tend to rise as compared to previous equilibrium price and quantity.