Assume that the demand curve for MP3 players shifts to the right and the supply curve for MP3 players shift to the left, but the supply curve shifts more than the demand curve.As a result
A)both the equilibrium price and quantity of MP3 players will decrease.
B)the equilibrium price of MP3 players will decrease; the equilibrium quantity will increase.
C)the equilibrium price of MP3 players may increase or decrease; the equilibrium quantity will decrease.
D)the equilibrium price of MP3 players will increase; the equilibrium quantity will decrease.

Question

Quizplus · Accepted Answer

When the supply curve shifts more than the demand curve, it means that the supply has decreased more than the demand has increased. This results in a decrease in the equilibrium quantity but an increase in the equilibrium price. Therefore, the correct answer is D.

Assume That the Demand Curve for MP3 Players Shifts to the Right