Q:

Scenario #1An increase in demand has led to an increase in both price and quantityWhat product would you like to say this is for your example?Describe a change in the "real world that would cause this kind of shift to happen in themarket for the product you chose.

Accepted Solution

A:
Answer:I would like to choose petrol with its complement good car, to explain this problem.The complementary goods refers to the goods which are used in pair such as pen and ink, bread and butter, pen and paper, vehicles and fuels etc.If the price of cars falls, it will lead to increase in quantity demanded of petrol and thereby its prices because cars and petrol are complementary goods. In real world market, if the cars became cheap then it will lead to the rise in demand of petrol and thereby its prices because due to fall in prices of cars more people will be able to buy it. When there are more users of car it will leads to more consumption of petrol which leads to increase it its price and quantity.The initial equilibrium point was at point $$e$$ but due to increase in demand of petrol the demand curve will shift to the right and new market equilibrium point will be at $$e_{1}$$Step-by-step explanation:Increase in demand is a situation that occurs by change in various factors such as consumer's income, price of substitute and complementary goods, change or advancement in technology, change in climate, change in fashion etc.Increase in demand cause a right shift of the demand curve which led to an increase in both price and quantity of a product and thereby the market will reach at the new equilibrium point which will lie on the new demand curve $$D_{2}$$ where the supply curve wil intersect the new demand curve $$D_{2}$$ i.e. at point $$e_{1}$$Β