The correct answer is Option 3: Statement 1 is true and Statement 2 is false.
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Statement 1: "When increase in demand is equal to increase in supply, equilibrium price remains unchanged."
- This is true because an equal increase in both demand and supply causes the new equilibrium to occur at the same price but with a higher equilibrium quantity.
- The rightward shift of the demand curve increases price, while the rightward shift of the supply curve decreases price, balancing each other out.
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Statement 2: "When increase in demand is equal to increase in supply, leftward shift in demand will be equal to leftward shift in supply."
- This is false because the question is about increase in demand and supply, but this statement mistakenly refers to a leftward shift, which means a decrease in both demand and supply.
- The correct statement should refer to rightward shifts instead.
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