The equilibrium quantity will decrease and the price might rise, fall, or stay the same when the

Question

Quizplus · Accepted Answer

When both demand and supply decrease, equilibrium quantity will decrease for sure, but it is uncertain whether the price would rise, fall, or stay the same as it depends on the extent of the shift in both curves. However, we can say with certainty that the equilibrium price will fall if the demand increases and the supply decreases (choice C) and rise if the demand decreases and the supply increases (choice A). When both demand and supply increase (choice B), the equilibrium price will depend on which curve shifts more.

The Equilibrium Quantity Will Decrease and the Price Might Rise