When supply and demand for a product decreases simultaneously, we can cannot pre
ID: 1207769 • Letter: W
Question
When supply and demand for a product decreases simultaneously, we can
cannot predict the change in either the equilibrium quantity or equilibrium price.
cannot predict equilibrium price but know that equilibrium quantity will decrease.
predict, that both equilibrium price and quantity will increase.
predict, that both equilibrium price and quantity will decrease.
a.cannot predict the change in either the equilibrium quantity or equilibrium price.
b.cannot predict equilibrium price but know that equilibrium quantity will decrease.
c.predict, that both equilibrium price and quantity will increase.
d.predict, that both equilibrium price and quantity will decrease.
Explanation / Answer
option B.iis the right answer: When demand falls, there will be a supply gap. If supply falls there will be a demand gap. If both the curves shift, then new equilbrium cannot be predicted. But if bothe the curves shift down wards to the left, we can be sure that new equilibrium will have a lower quantity ( both demanded and supplied)
All other options to do not hold up to the clasical demand- supply analysis.
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