When the demand curve shifts rightward and the supply curve shifts leftward, then the equilibrium price ________ and the equilibrium quantity ________.

Question

Quizplus · Accepted Answer

A rightward shift in the demand curve indicates an increase in demand, which, all else being equal, would tend to increase both the equilibrium price and quantity. A leftward shift in the supply curve indicates a decrease in supply, which, all else being equal, would tend to increase the price but decrease the quantity. When both shifts occur simultaneously, the equilibrium price will definitely rise because both shifts put upward pressure on price. However, the effect on equilibrium quantity is ambiguous without knowing the relative magnitudes of the shifts in demand and supply.

When the Demand Curve Shifts Rightward and the Supply Curve