Target Exam

CUET

Subject

Economics

Chapter

Micro Economics: Market Equilibrium

Question:

When both the demand and supply curves shift to indicate an increase in demand and supply in the same proportion. Then:

Options:

Only equilibrium price remains unchanged.

Only equilibrium quantity remains unchanged.

Equilibrium price remains unchanged but equilibrium quantity decreases.

Equilibrium price remains unchanged but equilibrium quantity increases.

Correct Answer:

Equilibrium price remains unchanged but equilibrium quantity increases.

Explanation:

The correct answer is Option (4) → Equilibrium price remains unchanged but equilibrium quantity increases.

When both demand and supply increase by the same proportion, the rightward shift of both curves leads to:

  • Equilibrium price staying the same, because the increase in demand is exactly matched by the increase in supply.

  • Equilibrium quantity increasing, since more of the good is both demanded and supplied at the same price.

Hence, the price stays unchanged, but the quantity traded increases.