An increase in demand without a corresponding change in supply will lead to

An increase in demand without a corresponding change in supply will lead to

Answer Details

If there is an increase in demand without a corresponding change in supply, it will lead to an increase in the equilibrium price and quantity. In a market with fixed supply, when demand increases, there will be more buyers willing to purchase the commodity at any given price, leading to a shortage or excess demand. This shortage will create a competition among buyers, causing them to be willing to pay a higher price to secure the limited supply. As the price increases, suppliers may also be motivated to increase their production, as they stand to gain more profits from the higher prices. Eventually, the price will increase to a point where the quantity demanded decreases, and quantity supplied increases, leading to a new equilibrium point with a higher price and quantity than before. Therefore, an increase in demand without a corresponding change in supply will lead to an increase in equilibrium price and quantity in the market.