If demand increases and supply is unchanged, what happens to price and quantity?

• A. The price remains constant.
• B. Only price increases; quantity stays the same.
• C. Quantity increases; price falls.
• D. Price and quantity both rise.

Answer: (D)

When demand increases while supply stays the same, the market moves to a new equilibrium where both price and quantity are higher. A higher demand means more buyers are willing to purchase at each price, so the demand curve shifts right. With the supply curve unchanged, this creates excess demand at the original price, pushing prices up. The price continues to rise until the quantity suppliers are willing to produce at that higher price matches the larger quantity that buyers want at the new demand level. The result is a higher equilibrium price and a higher equilibrium quantity. If price stayed the same, or if quantity fell, that would require a shift in supply or a different demand change; with a rightward demand shift and no supply change, both price and quantity rise.