Which of the following statements is correct?

Question

Quizplus · Accepted Answer

If price is above equilibrium, there is excess supply, and producers will lower their prices to attract buyers until demand and supply are equalized at the new equilibrium price. This will lead to a decrease in price and an increase in the quantity demanded.

Statement A is incorrect because changes in demand or supply can be caused by factors other than price, such as changes in consumer preferences or changes in technology.

Statement B is incorrect because a simultaneous decrease in demand and increase in supply will result in a decrease in equilibrium price and an uncertain effect on quantity.

Statement D is incorrect because an increase in supply will lead to a surplus or excess supply, not a shortage.

Which of the Following Statements Is Correct