Loading...
CFA Level 1
Economics

Impact of Increased Demand and Decreased Supply on Equilibrium

Very Hard Microeconomics Demand And Supply Analysis

A market for a particular product is initially in equilibrium. Due to changes in consumer preferences, there is a significant increase in demand for this product. Additionally, a natural disaster disrupts the supply chain, reducing the supply of this product. Assuming that the demand increases more significantly than the supply decreases, what is the likely short-term effect on the equilibrium price and quantity of the product?

Hint

Submitted2.8K
Correct2.4K
% Correct88%