PRC-3 · Chapter 10 · Question 30 of 70
Because of a sudden, intense heatwave, the demand for air conditioners skyrockets (shifting right). Simultaneously, a factory strike severely restricts the supply of air conditioners (shifting left). What happens to the equilibrium?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Price will definitely rise, but the effect on quantity is indeterminate
Explanation
Both an increase in demand and a decrease in supply exert upward pressure on price. However, they push quantity in opposite directions, making the net change in quantity indeterminate.
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