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Question
A decrease in demand and increase in supply causes the equilibrium price to __________.
A decrease in demand and increase in supply causes the equilibrium price to __________.
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Solution
The correct option is C Fall
A decrease in demandand an increase in supply will cause a fall in equilibrium price, but the effect on equilibrium quantity cannot be determined.
For any quantity, consumers now place a lower value on the goods, and producers are willing to accept a lower price; therefore, the price will fall.
A decrease in demandand an increase in supply will cause a fall in equilibrium price, but the effect on equilibrium quantity cannot be determined.
For any quantity, consumers now place a lower value on the goods, and producers are willing to accept a lower price; therefore, the price will fall.
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