We cannot predict the effect on the market clearing price, but know that the equilibrium quantity will decrease when
A) supply increases and demand decreases
B) supply decreases and demand increases.
C) supply and demand for a product simultaneously decrease.
D) supply and demand for a product simultaneously increase.

Question

Quizplus · Accepted Answer

When both supply and demand for a product simultaneously decrease, the equilibrium quantity will decrease because there is less supply available and less demand for it. However, the effect on the market clearing price is uncertain without knowing the magnitude of the shifts in supply and demand.

We Cannot Predict the Effect on the Market Clearing Price