An increase in the demand for good A will increase the equilibrium quantity of good A and leave the equilibrium price unchanged if
Part 2
A.
the supply curve is horizontal.
B.
the supply curve is vertical and the demand curve has a non-zero positive slope.
C.
the supply curve has a non-zero negative slope and the demand curve is vertical.
D.
the demand curve is downward sloping.
E.
both the supply and demand curves have a non-zero slope.
E. both the supply and demand curves have a non-zero slope.
The correct answer is D.
An increase in the demand for good A will increase the equilibrium quantity of good A and leave the equilibrium price unchanged only if the demand curve is downward sloping.
When the demand curve is downward sloping, an increase in demand will result in a higher equilibrium quantity, as consumers are willing to buy more at the same price. However, the equilibrium price will remain unchanged because the increase in demand is met by an increase in supply, ensuring that the market is still in balance.
Option A is incorrect because a horizontal supply curve indicates that the quantity supplied remains the same regardless of price, and any increase in demand will lead to an increase in the equilibrium price.
Option B is incorrect because a vertical supply curve means that the quantity supplied is fixed, so an increase in demand will only result in an increase in price, not quantity.
Option C is incorrect because a supply curve with a non-zero negative slope indicates that the quantity supplied decreases as the price increases. In this case, an increase in demand would lead to both an increase in price and a decrease in quantity supplied.
Option E is incorrect because if both the supply and demand curves have a non-zero slope, an increase in demand will cause both the equilibrium quantity and price to change.
To determine which option is correct, we need to understand the relationship between supply and demand curves and their effects on equilibrium price and quantity.
In this scenario, we are analyzing the impact of an increase in demand for good A on the equilibrium quantity and price. There are five options to consider—A, B, C, D, and E. Let's evaluate each option one by one:
A. If the supply curve is horizontal, it means that the quantity supplied does not change regardless of changes in price. In this case, if there is an increase in demand for good A, the equilibrium quantity will increase, but the equilibrium price will remain unchanged. This option aligns with the given information, so it could be the correct answer.
B. If the supply curve is vertical, it means that the quantity supplied cannot be increased regardless of changes in price. However, the demand curve has a non-zero positive slope, indicating that an increase in demand can be met by a corresponding increase in supply. Therefore, the equilibrium quantity of good A would increase, but the equilibrium price may also increase. This option does not fully match the provided statement, so it is not the correct answer.
C. Here, the supply curve has a non-zero negative slope, suggesting that an increase in price leads to a decrease in quantity supplied. Additionally, the demand curve is vertical, indicating that the quantity demanded does not change regardless of price. In this situation, an increase in demand for good A would only affect the equilibrium quantity, which would increase, but the equilibrium price would remain unchanged. This option aligns with the given information and could be the correct answer.
D. If the demand curve is downward sloping, it implies that as price increases, the quantity demanded decreases. An increase in demand for good A would result in a higher equilibrium quantity and potentially a higher equilibrium price. This option does not align with the statement, so it is not the correct answer.
E. If both the supply and demand curves have a non-zero slope, an increase in demand for good A would impact both the equilibrium quantity and equilibrium price. This option does not match the given information, so it is not the correct answer.
After analyzing the options, it seems that both option A (if the supply curve is horizontal) and option C (if the supply curve has a non-zero negative slope and the demand curve is vertical) could be correct. To make a final choice, additional context or information may be needed.