Suppose that both demand and supply curves shift. If the equilibrium price decreases, but equilibrium quantity remains unchanged, this result can be explained by a(n)
A) increase in demand and an increase in supply
B) increase in demand and a decrease in supply
C) decrease in demand and an increase in supply
D) decrease in demand and a decrease in supply

Question

Quizplus · Accepted Answer

A decrease in demand would tend to lower the equilibrium price, and an increase in supply would also tend to lower the equilibrium price. If the shifts are such that the quantity remains the same, it means that the decrease in demand is offset by the increase in supply in terms of quantity, but both contribute to a lower price.

Suppose That Both Demand and Supply Curves Shift