A shift to the left of the demand curve for X together with a shift to the right of the supply curve for X tends to:
A)increase the price of X; the effect upon the quantity exchanged is indeterminate.
B)increase the price of X and to increase the quantity exchanged.
C)decrease the price of X and to decrease the quantity exchanged.
D)decrease the price of X; the effect upon quantity exchanged is indeterminate.
E)make changes in both the price of X and the quantity of X exchanged that are indeterminate.

Question

Quizplus · Accepted Answer

A leftward shift in demand curve for X indicates a decrease in demand for X, which leads to a decrease in the equilibrium quantity of X. At the same time, a rightward shift in the supply curve for X shows an increase in supply for X, which leads to an increase in the equilibrium quantity of X. Therefore, the quantity exchanged is likely to decrease, while the effect on the price of X is uncertain. However, we can say with certainty that the price of X is likely to decrease, as the decrease in demand for the product causes a downward pressure on its price.

A Shift to the Left of the Demand Curve for X