Question

If decease in demand is greater than the decrease in supply, then the Equilibrium Price -

• A. Decreases
• B. Increases
• C. Does not change at all
• D. Cannot be commented upon.

Answer 1

The correct option is A Decreases

The equilibrium price remains the same but there is a decrease in the equilibrium quantity. When the decrease in demand is greater than the decrease in supply, the demand curve shifts more towards left relative to the supply curve. Effectively, there is a fall in both equilibrium quantity and price.