Answer to Question #81790 in Microeconomics for max

Question #81790
Nowadays, It is observed that people are more health conscious taking more regular health supplements. Moreover, more drug companies are involving in the production of health supplements.
a) How would the demand of health supplements be affected? Explain the consequences of the impact on the equilibrium price and equilibrium quantity?
b) How would the supply of health supplements be affected? Explain the consequences of the impact on the equilibrium price and equilibrium quantity?
c) Consider (a) and (b) together, it is observed that eventually the equilibrium price decreases, explain your simple analysis and show your illustrations with a demand and supply diagram.

My answer:c) When both the demand and supply shifts to the right, the equilibrium price decreases and the equilibrium quantity increases.
Is this correct? How can I improve the answer?
1
Expert's answer
2018-10-10T09:58:09-0400

Nowadays, It is observed that people are more health conscious taking more regular health supplements. Moreover, more drug companies are involving in the production of health supplements.

a) The demand of health supplements would increase. The equilibrium price would increase and equilibrium quantity would increase too.

b) The supply of health supplements would increase. The equilibrium price would decrease and equilibrium quantity would increase.

c) When both the demand and supply shifts to the right, the equilibrium price may increase or decrease and the equilibrium quantity increases. If it is observed that eventually the equilibrium price decreases, then the increase in supply was higher than the increase in demand.

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