A rightward shift in demand will cause an increase in price. The increase in price will cause a rightward shift of the supply curve, which will lead to an offsetting decrease in price. Therefore, it is impossible to tell what effect an increase in demand will have on price. Do you agree with your friend? A. No, the offsetting supply shift caused by the higher price will not be as large as the demand shift, so we know the price will rise some. B. No, the increase in price will not cause a shift of the supply curve. C. Yes, any time both the supply and demand curves shift, it becomes impossible to accurately determine the impact on the price of a good. D. Yes, since the shift in demand that raises the price must cause an offsetting shift in supply, we cannot know the impact
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