If demand and supply both decrease
A) the equilibrium quantity definitely will decrease, and the market clearing price definitely will decrease.
B) the equilibrium quantity definitely will decrease, and the market clearing price definitely will increase.
C) the market clearing price definitely will decrease, but the change in the equilibrium quantity cannot be determined without more information.
D) the equilibrium quantity definitely will decrease, but the change in market clearing price cannot be determined without more information.

Question

Quizplus · Accepted Answer

When both demand and supply decrease, the change in equilibrium quantity can be determined because both factors lead to a decrease in quantity. However, the change in market clearing price cannot be determined without more information because the direction and magnitude of the impact on price depends on how much each factor has decreased.

If Demand and Supply Both Decrease