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If both demand and supply increase by exactly the same amount, the new equilibrium will show:
AA higher price with an unchanged quantity
BA lower price with a smaller quantity
CAn unchanged price with an unchanged quantity
DAn unchanged price with a larger quantity
Answer & Solution
Correct answer: D. An unchanged price with a larger quantity
1. Both curves shifting right always raises equilibrium quantity.
2. When the increase in demand equals the increase in supply, the upward and downward price pressures cancel.
3. The new equilibrium price equals the old price; that rules out options A and B.
4. Price unchanged but quantity larger means option D is correct.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 4 Unit II "Determination of Prices", p.6_
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