Following adjustments to a new equilibrium in a market, the market clearing price remains unchanged, but the equilibrium quantity is now lower. Which of the following could definitely have caused this outcome?
A) Demand and supply both increased.
B) Demand and supply both decreased.
C) Demand increased, and supply decreased.
D) Demand decreased, and supply increased.

Question

Quizplus · Accepted Answer

When both demand and supply decrease, the equilibrium quantity will decrease. The market clearing price can remain unchanged if the decreases in demand and supply are proportionate, leading to a new equilibrium point at a lower quantity but the same price.

Following Adjustments to a New Equilibrium in a Market, the Market