An unusually hot summer has shifted the demand curve for lemonade to the right. At the new equilibrium, you can expect _____.

Question

a decrease in quantity supplied and an increase in price

an increase in quantity supplied and an increase in price

an increase in quantity supplied and a decrease in price

a decrease in quantity supplied and a decrease in price

Answer 1

When the demand curve shifts to the right due to an increase in demand (in this case, because of an unusually hot summer), we can expect an increase in both the equilibrium price and the equilibrium quantity supplied.

As demand increases, suppliers will respond by producing more lemonade, leading to an increase in quantity supplied. Additionally, the increase in demand will put upward pressure on the price.

Therefore, the correct answer is:

an increase in quantity supplied and an increase in price.