Consider a competitive market for a hypothetical product. Suppose that
there is an extended period during which both demand for the product has grown (demand-
sidereservation prices have increased) and technological developments have lowered the costs ofproduction (and therefore supply side reservation prices have decreased). Over this period, whichof the following four equilibrium possibilities are feasible? Circle the correct answer foreach.
(a) Equilibrium price and quantity both increase: feasible / infeasible
(b) Equilibrium price and quantity both decrease: feasible / infeasible
(c) Equilibrium price increases and equilibrium quantity decreases: feasible / infeasible
(d) Equilibrium price decreases and equilibrium quantity increases: feasible / infeasible