Figure 2.3.1
-The effect of the September 11 attacks on the World Trade Center on the market for office space in downtown Manhattan was that both the equilibrium price and the equilibrium quantity fell. What is the most likely explanation for this?
A) Supply and demand both shifted left, and the magnitude of the demand shift was greater.
B) Supply and demand both shifted left, and the magnitude of the supply shift was greater.
C) Supply shifted left, demand shifted right, and the magnitude of the demand shift was greater.
D) Supply shifted left, demand shifted right, and the magnitude of the supply shift was greater.

Question

Figure 2.3.1
-The effect of the September 11 attacks on the World Trade Center on the market for office space in downtown Manhattan was that both the equilibrium price and the equilibrium quantity fell. What is the most likely explanation for this?
A) Supply and demand both shifted left, and the magnitude of the demand shift was greater. 
B) Supply and demand both shifted left, and the magnitude of the supply shift was greater. 
C) Supply shifted left, demand shifted right, and the magnitude of the demand shift was greater. 
D) Supply shifted left, demand shifted right, and the magnitude of the supply shift was greater.

Quizplus · Accepted Answer

The September 11 attacks on the World Trade Center caused a decrease in the supply of office space due to physical destruction and safety concerns. At the same time, there was a decrease in demand as companies relocated and avoided the area. Both shifts caused the equilibrium price and quantity to fall, but the magnitude of the demand shift was greater, resulting in a larger overall decrease in equilibrium price and quantity.

Figure 2.3.1 -The Effect of the September 11 Attacks on the World