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

Question

Quizplus · Accepted Answer

An increase in demand raises the equilibrium price and quantity, while a decrease in supply raises the equilibrium price but lowers the equilibrium quantity. The net effect on quantity is indeterminate without knowing the magnitude of shifts, but the price will definitely increase.

An Increase in Demand and a Decrease in Supply Will