Asked by Alexandria Russell on Apr 26, 2024
Verified
An increase in demand and a decrease in supply will lead to a(n) _____ in equilibrium quantity and a(n) _____ in equilibrium price.
A) decrease;decrease
B) indeterminate change;increase
C) indeterminate change;decrease
D) increase;indeterminate change
Equilibrium Quantity
The quantity of goods or services supplied and demanded at the point where supply and demand curves intersect.
Equilibrium Price
The market price at which the supply of an item equals the demand for the item, leading to a stable market condition.
- Acquire knowledge on the effects of shifting supply and demand on both equilibrium price and quantity levels.
- Estimate the impact on market conditions following fluctuations in supply and/or demand.
Verified Answer
JB
Jacob BuneaApr 26, 2024
Final Answer :
B
Explanation :
An increase in demand tends to increase both equilibrium quantity and price, while a decrease in supply tends to increase price but decrease quantity. The combined effect on quantity is indeterminate (it could go either way depending on the magnitude of the shifts), but the effect on price is a definite increase.
Learning Objectives
- Acquire knowledge on the effects of shifting supply and demand on both equilibrium price and quantity levels.
- Estimate the impact on market conditions following fluctuations in supply and/or demand.
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