When the demand decreases and the supply increases, the equilibrium price and the equilibrium quantity .

increases

No worries! We‘ve got your back. Try BYJU‘S free classes today!

decreases

Right on! Give the BNAT exam to get a 100% scholarship for BYJUS courses

remains same

No worries! We‘ve got your back. Try BYJU‘S free classes today!

is ambiguous

Right on! Give the BNAT exam to get a 100% scholarship for BYJUS courses

Open in App

Solution

The correct options are
B decreases
D is ambiguous
The two factors of decrease in demand and the increase in supply both cause the price to go down. However, the equilibrium quantity can be either more or less than before, depending on whether the supply shifted by a greater margin than demand or not.

Suggest Corrections

Similar questions

When both demand and supply decrease, the equilibrium quantity falls but the change in equilibrium price is ambiguous.

Q.
Show withe the help of diagrams, the effect on equilibrium price and quantity when:
(i) demand is perfectly elastic and supply decreases.
(ii) supply is perfectly elastic and demand increases.

An increase in demand leads to a decrease in both the equilibrium price and the equilibrium quantity. A decrease in demand leads to a rise in both the equilibrium price and the equilibrium quantity.

Q. When demand decreases and there is no change in supply, both equilibrium price and quantity will _________.

Q. When demand increases and supply decreases, the equilibrium can either increase or decrease.

Join BYJU'S Learning Program

Select...