An increase in demand causes
A) a surplus
B) excess supply
C) an increase in supply
D) an increase in equilibrium price and equilibrium quantity
E) an improvement in technology

Question

Quizplus · Accepted Answer

An increase in demand will lead to a shift in the demand curve to the right. This will cause the equilibrium price and equilibrium quantity to increase. This is because there is now more demand for the product, and suppliers will need to produce more at a higher price in order to meet this demand. A surplus or excess supply would occur if there was too much supply relative to the demand, which is not the case when there is an increase in demand. An improvement in technology is not related to changes in demand and supply, and therefore is not the correct choice.

An Increase in Demand Causes