If both demand and supply decrease at the same time, then
A) the equilibrium price will increase.
B) the equilibrium price will decrease.
C) the equilibrium quantity will increase.
D) the equilibrium quantity will decrease.

Question

Quizplus · Accepted Answer

When both demand and supply decrease, the equilibrium quantity will decrease because there is less quantity demanded and less quantity supplied. The effect on equilibrium price is indeterminate without knowing the relative magnitudes of the shifts.

If Both Demand and Supply Decrease at the Same Time