A simultaneous decrease in the demand and the supply of good X always leads to a decrease in the price of good X.

Question

Quizplus · Accepted Answer

A simultaneous decrease in both demand and supply of a good creates a state of disequilibrium in the market. In this case, the tendency is for the price to decrease, but it is not certain. Other factors such as the degree of the decrease in demand and supply, the elasticity of demand, and the availability of substitute goods can also influence the price. Therefore, a decrease in demand and supply does not always lead to a decrease in price.

A Simultaneous Decrease in the Demand and the Supply of Good