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Suppose there is a simultaneous increase in the demand for diamonds and increase in the supply of diamonds. Which of the following will occur as a result of these simultaneous events?
a. Both the market clearing price and equilibrium quantity will rise.
b. The market clearing price will fall, but the equilibrium quantity may rise, fall, or stay the same.
c. The market clearing price may rise, fall, or stay the same, but the equilibrium quantity will increase.
d. The market clearing price will fall, but the equilibrium quantity will rise.
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WHAT IS THE BEST EXCHANGE RATE TYPE
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Explain why P=MC in the short-run equilibrium of the perfectly competitive firm, whereas in the long-run equilibrium P=MC=AC.
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