A leftward shift in supply and a rightward shift in demand would cause an unambiguous decrease in the equilibrium quantity in a market.

Question

Quizplus · Accepted Answer

A leftward shift in supply causes an increase in the equilibrium price and a decrease in the equilibrium quantity. A rightward shift in demand causes an increase in both the equilibrium price and quantity. Therefore, the simultaneous occurrence of these shifts would result in an ambiguous effect on the equilibrium quantity. If supply shifts leftward and demand shifts rightward, the equilibrium price will increase but the effect on the equilibrium quantity will depend on the magnitude of the shifts. If the increase in demand is greater than the decrease in supply, the equilibrium quantity will increase. If the decrease in supply is greater than the increase in demand, the equilibrium quantity will decrease. Therefore, the statement is false.

A Leftward Shift in Supply and a Rightward Shift in Demand