Suppose demand decreases and supply decreases, but demand decreases more than supply.What will happen to equilibrium price and quantity?

Question

Quizplus · Accepted Answer

When demand decreases more than supply, it indicates that there are more suppliers than buyers in the market, resulting in a surplus of goods. In such a scenario, suppliers will lower the price to clear the excess supply, leading to a decrease in equilibrium price. The decrease in demand will also result in a decrease in equilibrium quantity as the market equilibrium point moves towards the point where the quantity supplied and quantity demanded are equal. Thus, the correct choice is B.

Suppose Demand Decreases and Supply Decreases, but Demand Decreases More