An increase in demand for oil along with a simultaneous increase in supply of oil will Increase quantity.
What happens when both supply and demand increase?
- If both demand and supply increase, there will be an increase in the equilibrium output, but the effect on price cannot be determined.
- 1. If both demand and supply increase, consumers wish to buy more and firms wish to supply more so output will increase.
What happens when demand increases and supply decreases?
- If demand increases and supply remains unchanged, a shortage occurs, leading to a higher equilibrium price.
- If demand decreases and supply remains unchanged, a surplus occurs, leading to a lower equilibrium price.
What is equilibrium of demand and supply?
- Equilibrium is the state in which market supply and demand balance each other, and as a result prices become stable.
- Generally, an over-supply of goods or services causes prices to go down, which results in higher demand—while an under-supply or shortage causes prices to go up resulting in less demand.
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