When supply increases and at the same time demand decreases, we
A) can predict that both equilibrium price and quantity will increase.
B) can predict that both equilibrium price and quantity will decrease.
C) cannot predict equilibrium quantity, but know that equilibrium price will decrease.
D) cannot predict the change in either the equilibrium quantity or equilibrium price.

Question

Quizplus · Accepted Answer

When supply increases, it puts downward pressure on price because more goods are available. When demand decreases, it further reduces the price because there's less desire for the goods. However, the effect on quantity is uncertain without knowing the magnitude of the shifts in supply and demand.

When Supply Increases and at the Same Time Demand Decreases