Which of the following statement/statements are true? 

Statement 1: When increase in demand is less than increase in supply, equilibrium price falls. 

Statement 2: When increase in demand is less than increase in supply, equilibrium quantity increases.

Both Statements are true

The correct answer is option 1: Both Statements are true

• Statement 1: "When increase in demand is less than increase in supply, equilibrium price falls."

  • This is true because when supply increases more than demand, the excess supply creates downward pressure on price, leading to a fall in the equilibrium price.
  • The increased supply means sellers must lower prices to clear their stock.

• Statement 2: "When increase in demand is less than increase in supply, equilibrium quantity increases."

  • This is true because both an increase in demand and an increase in supply lead to higher equilibrium quantity.
  • Even if demand increases by a smaller amount than supply, the overall effect still results in a rise in quantity exchanged in the market.