If the supply curve and the demand curve both shift to the left, then the new equilibrium:
A)quantity will be higher, but the direction of the price change is uncertain.
B)price will be lower, but the direction of the change in quantity is uncertain.
C)price will be higher, but the direction of the change in quantity is uncertain.
D)quantity will be lower, but the direction of the price change is uncertain.

Question

Quizplus · Accepted Answer

When both supply and demand decrease, the equilibrium quantity will be lower, but the price may be higher, lower, or the same because the decrease in supply will tend to increase the price while the decrease in demand will tend to decrease the price, so without knowing which is larger, the direction of the price change cannot be determined.

If the Supply Curve and the Demand Curve Both Shift