An increase in demand and a decrease in supply will lead to a(n)_____ in equilibrium quantity and a(n)_____ in equilibrium price.
A)decrease;decrease
B)indeterminate change;increase
C)indeterminate change;decrease
D)increase;indeterminate change

Question

Quizplus · Accepted Answer

An increase in demand tends to increase both equilibrium quantity and price, while a decrease in supply tends to increase price but decrease quantity. The combined effect on quantity is indeterminate (it could go either way depending on the magnitude of the shifts), but the effect on price is a definite increase.

An Increase in Demand and a Decrease in Supply Will