Figure 4.7
-If demand decreases and supply increases in Figure 4.7,then the equilibrium

Question

Quizplus · Accepted Answer

If demand decreases and supply increases, the market will have excess supply. This means that there will be a surplus of goods in the market, leading to a decrease in price as sellers try to clear their inventories. Therefore, the equilibrium price falls. The quantity traded in the market will depend on the magnitude of the shifts in demand and supply. If the increase in supply is larger than the decrease in demand, the quantity traded will increase, and vice versa. However, we cannot determine the direction of the change in quantity traded with certainty, as it depends on the relative magnitude of the shifts in demand and supply.

Figure 4.7 -If Demand Decreases and Supply Increases in Figure 4.7,then the 4.7,then