Asked by Evaristo Perez on May 19, 2024
Verified
One can say with certainty that equilibrium price will decline when supply:
A) and demand both decrease.
B) increases and demand decreases.
C) decreases and demand increases.
D) and demand both increase.
Equilibrium Price
The cost at which the amount of a product or service that consumers want to purchase matches the amount available, leading to equilibrium in the market.
Supply Decreases
A reduction in the amount of a product or service that is available for sale, often resulting in higher prices if demand remains the same.
Demand Increases
A situation in which the desire and willingness to purchase a good or service rises, often due to factors like income growth or preference changes.
- Grasp the impact of government interventions, such as price floors and ceilings, on market outcomes.
- Demonstrate understanding of market mechanisms in allocating resources efficiently.
Verified Answer
RN
Reshonn N SutphinMay 24, 2024
Final Answer :
B
Explanation :
When the supply increases and the demand decreases, there is an excess supply of the product in the market. This puts pressure on the sellers to reduce the price of the product to attract buyers, resulting in a decline in the equilibrium price.
Learning Objectives
- Grasp the impact of government interventions, such as price floors and ceilings, on market outcomes.
- Demonstrate understanding of market mechanisms in allocating resources efficiently.