If both the demand and the supply curves shift to the left the equilibrium quantity will fall, but the effect on equilibrium price is ambiguous without more information.

Question

Quizplus · Accepted Answer

When both demand and supply decrease, the equilibrium quantity will definitely fall because there is less being supplied and demanded. However, the effect on price is ambiguous because it depends on the magnitude of the shifts. If demand decreases more than supply, price could fall; if supply decreases more than demand, price could rise.

If Both the Demand and the Supply Curves Shift to the Left