A decrease in the demand for incandescent light bulbs due to changes in consumer tastes, accompanied by a decrease in the supply of incandescent light bulbs as a result of government restrictions, will result in
A)a decrease in the equilibrium quantity of incandescent light bulbs and no change in the equilibrium price.
B)a decrease in the equilibrium price of incandescent light bulbs and no change in the equilibrium quantity.
C)a decrease in the equilibrium price of incandescent light bulbs; the equilibrium quantity may increase or decrease.
D)a decrease in the equilibrium quantity of incandescent light bulbs; the equilibrium price may increase or decrease.

Question

Quizplus · Accepted Answer

A decrease in both demand and supply will lead to a decrease in the equilibrium quantity of incandescent light bulbs. However, the change in equilibrium price is uncertain and depends on the extent of the shifts in demand and supply. If the decrease in demand is greater than the decrease in supply, the equilibrium price will decrease as well. However, if the decrease in supply is greater than the decrease in demand, the equilibrium price will increase. Therefore, there is no conclusive evidence to support option A or B, and option C is not likely as the decrease in demand is likely to offset any potential price decrease resulting from the decrease in supply.

A Decrease in the Demand for Incandescent Light Bulbs Due