Suppose that two things happen simultaneously in the market for fish. First, a new technology allows fishing boats to catch more fish while using the same number of crew members as before. Second, a new study shows that eating fish at least three times a week helps prevent heart attacks.

As a result, the equilibrium price for fish will _____.

a. increase

b. decrease

c. have an ambiguous change

• The correct option is c. have an ambiguous change.

The improvement in technology will reduce the cost of fishing so that more fish can be supplied at all prices. This will cause the supply curve to shift to the right. The supply curve will meet the old demand curve at a lower point so that prices are reduced, and quantity is increased.

The demand curve will shift to the right as people will demand more fish at all prices due to the study. The new demand curve will meet the old supply curve at a higher point, which will mean that prices will increase and the quantity in the market will increase.

Now, as we can see, the change in the demand and supply will both definitely increase the quantity in the market. However, the change in supply will decrease price, and the change in demand will increase the price. Whether the price increase or decrease depends on the relative strength of the shift in the demand and supply curves.